Best Short-Term Loans: Personal Loans With No Prepayment Penalty

Most of the short-term loans are available with high rate of interest and fees. If the borrower has a good credit score, the personal loan might be available to the person at a considerably lower rate of interest. The borrower can also prepay the loan to foreclose and save on the interest amount.

What Is A Short-Term Loan?

Short-term loan is a loan with repayment period of one year or less. It may require little or no collateral and very few documents like employment proof, monthly salary slip and identity proof. Even the credit requirements of short-term loans are lower than other types of loans. These loans have a steep rate of interest to cover up the risk taken by the lender.

Points To Consider When Availing A Short-Term Personal Loan

Before availing a personal loan, ensure that you have compared the expenses and terms of various loan providers so that you take an informed decision. Also ensure that the monthly repayment amount is comfortable on your pocket and the overall loan amount serves your purpose. They should not carry exorbitant fees. The factors to determine while availing a short-term personal loan are

• Origination fees
• Interest rates
• Prepayment penalties
• Repayment tenure
• Monthly payment amount

Short Term Loans With No Prepayment Penalties

There are some lenders that provide online short-term personal loans with no prepayment penalties. Some of them are listed below:

• Happy Money –

It specializes in customers who would like to consolidate their high interest debts to save money. They also give access to various finance managing tools. There are no prepayment charges or late payment fees. It may have an origination fee which depends on the loan amount. The process to fund may take a little longer time than other online lenders. There is no minimum credit score requirement to avail a loan.

• LightStream –

LightStream is a funding agency which provides loan on low rate of interest. If you have a good credit score and a lengthy credit history you can be eligible for its flexible loan which does not have any spending restrictions. There are no prepayment fees or any other charges. It offers same day funding of the loan.

• SoFi –

It helps you level up your finances by providing services like financial advisors, career coaches and other virtual experiences and events. It has a seamless application process with no origination fees, prepayment fees and late payment fees. In case you are not eligible for the loan on the basis of your financial health, SoFi allows joint application for the loan.

• Upstart –

Upstart considers work history and your education along with your credit score to provide you a personal loan. It has a rapid funding option and competitive rate of interest. Though it does not charge any prepayment charge but it still charges you an origination fee of up to 10% of the loan amount, late payment and returned payment fees.

Pros And Cons Of Short-Term Personal Loan

Pros

• Quick disbursement of the loan – the loan may be disbursed in short time
• Quick and easy application process
• Since there are many lenders, you can shop around to find the best lender that provides loans at rate and terms according to your financial need and repaying capacity
• These loans provide a good opportunity to borrowers with bad credit score to help improve their credit score and credit history

Cons

• Many lenders are ready to provide loans to borrowers having a low credit score. This gives the lenders an opportunity to charge a high rate of interest
• Many lenders charge a steep fees for late payment and origination fees

Alternatives For Short Term Personal Loans

You can fund your need by other options rather than availing a short-term personal loans.

• Credit card – You can use the available credit on your credit card to meet your short-term financial needs. You may also apply for a credit card which offers zero per cent APR on purchases. Ensure that you settle the credit card bill before the due date to avoid accruing interest on those purchases.

• Car title loan – You can use your car as a collateral and avail loan up to 50% of its market value. The loan attracts a hefty rate of interest and can stretch your budget too thin. You could also lose your vehicle if you fall behind on making your payments.

Conclusion

Though personal loans can help sail you through your financial hardship or a huge expense, you should shop around to find a lender who does not charge prepayment fees. You can easily pay off your loan if you get a loan with lengthy repayment period at high rate of interest. Prepaying the loan will save you on the interest amount.

There are other options like credit cards and car title loans which can be used instead of availing a short-term loan. You should weigh the pros and cons of each available financial option available in order to make an informed and intelligent financial decision. You should choose the option that fits your repaying capacity and meets your financial requirement.

IIFL provides its customers collateral-free personal loans of up to Rs 5 lakh with minimal documentation and at competitive interest rates. IIFL Finance also provides long-term secured loans for up to Rs 10 crore.