Advantages & Disadvantages of Short-Term Personal Loans - Ayaan Finserve India

Pros & Cons of Short-Term Personal Loans in India

In India, unexpected expenses aren’t uncommon — from sudden medical bills and festive spending to delayed salaries. In such times, it is normal for people to turn towards short-term personal loans for quick financial support. Though these loans can help in emergencies or bridge salary gaps, it’s important to evaluate short-term loans benefits and drawbacks before deciding.

At AFI, our focus is on providing quick, convenient, and unsecured short-term personal loans, especially for salaried individuals in the country. However, before applying, we'll examine its good and not-so-good sides of short-term personal loans.

Advantages and Disadvantages of Short-Term Loan

Here’s a summary of the pros and cons of taking a short-term personal loan in India:

Advantages of Short-Term Personal Loans

Short-term personal loans are getting more and more popular as they match how we live – fast-paced, and with immediate needs that can’t wait for lengthy processes at banks. Here are the key to advantages of short-term loans to keep in mind.

1. Quick Access to Funds

• Ideal for urgent needs like medical bills or school fees, etc.

• Funds are usually disbursed within 24–48 hours (sometimes even sooner with NBFCs like AFI)

• Minimal waiting and processing time

2. Flexible Usage

• Can be used for anything: festivals, house repairs, phone upgrades, tuition, or even social functions

3. No Collateral Required

• No need to mortgage property, gold, or other assets

• Safer and easier access for first-time borrowers or those without significant wealth

4. Minimal Documentation

• No complex forms – just your ID, address, and income details.

• Forget the paperwork headache; approval is quick compared to other types.

5. Improves Credit Score

• Responsible repayment improves your CIBIL or credit score

• Makes you eligible for larger loans in the future at better rates

6. Flexible Repayment Options

• Tenures range from 3 months -12 months

• You get to choose a loan term that suits your cash flow and repayment comfort

₹5,000 to ₹50,000 in just 30 Minutes. No Collateral. No Headaches.

AFI Short-Term Loans – Made for Working Professionals Across India.

Disadvantages of Short-Term Personal Loans

As your trusted partner, we want to make sure you know the disadvantages of short term loans before picking your provider for your requirements.

Comparatively Higher Interest Rates

• Because short-term loans don’t require any collateral, lenders often charge higher interest rates to cover their risk — especially if your credit history isn’t great.

• Interest rates can go up significantly for borrowers with average or poor credit scores.

Short Repayment Tenure

• While short tenure means quicker debt clearance, it also results in higher EMI amounts.

• Monthly financial pressure can increase, especially during unpredictable expenses.

Risk of Debt Cycle

• Easy availability can lead to borrowing more frequently than necessary.

• Without disciplined financial planning, borrowers may fall into a debt cycle.

Processing Fees and other Charges

• Most lenders add a processing fee. Additionally, you might pay penalties if you repay early or miss an EMI.

• Such extra costs can make the loan more expensive than it seems at first.

Strict Eligibility & Approval

• Not all applicants qualify—especially those with job instability or low credit scores.

• Limited options for people without formal income documentation or new in their jobs.

Penalty Charges

• Failure to pay EMIs on time can lead to additional penalty charges.

• Paying off your loan early could trigger extra fees that significantly increase your total repayment.

At AFI, we recognize that fairness is essential – be it with terms or rates, which is why we provide competitive interest rates and transparent terms —ensuring you can access funds with complete transparency.

What Are the Eligibility Criteria and Documents Required for Short-Term Loans?

Our loans at Ayaan Finserve India are designed specifically for salaried individuals who have stable income and decent credit. In order to be eligible, you must be an Indian resident with at least 21 years of age. You also must earn ₹30,000 monthly along with one year of work experience.

We require just a few simple documents — your ID proof, address proof, and salary slips. If you are one looking for such short-term loans or if you are simply browsing for more info, contact us at AFI today – our team is here to help you.

Final Thoughts

Short-term personal loans can be the smart solution and can work wonders when used responsibly. At AFI, we are committed to keeping it transparent and fair — so you can make confident choices.

Need funds fast?

Apply now!

Frequently Asked Questions (FAQ)

1. What exactly is a short-term loan, and how does it work?

A short-term loan is a financial loan that provides quick and easy access to funds – requiring repayment sooner compared to traditional loans. Such loans help cover urgent expenses - such as medical bills, home repairs, or other unplanned expenses you may face. One of the key advantages of a short-term loan is how fast and flexible it can be in such situations. You can apply by visiting AFI’s website or using the AFI mobile application. As these loans are unsecured, AFI will perform a background check and analyse your credit history. However, documentation and approvals are quick compared to other loans.

2. What is the usual duration or tenure for a short-term loan repayment?

Usually with short-term personal loans, the repayment tenure will fall between within a few months to one year. Please do note that this tenure cannot be changed after disbursing the short-term loan.

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