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Should I choose Short Term or Long term personal loan?

Today the digital era has seen a transformation in digital lending and a setback in the traditional lending of loans. Availing online loans are hassle-free with minimum documentation. Banks have pre-approved personal loans for salaried individuals. Today instant personal loan apps offer loans starting at Rs 3000. Depending on your creditworthiness, lenders may reduce the rates of interest. Lenders are offering loans at minimum or no foreclosure charges.

Personal loans can be availed for short term and long term. Let us understand their features and properties in detail:

Long term loans: Loans that are availed for 24-60 months are termed as long term loans. It is of higher value and suited to more long-term needs. A lender may or may not ask for pledging security in case of long-term loans. It is at the discretion of the lender. This is why the interest rate of longer tenure loans are low. Lenders too are easy to convince in case of long tenure loans.

Short term loans – Loans that are less than 24 months are termed as short term loans. Borrowers in need of urgent money are not asked to pledge any collateral. There are a plethora of digital lenders these days who offer personal loans instantly to the customers. Lenders may charge a bit higher rate of interest as no collateral is involved. 

What are the significant differences in long term loans and short term loan?

Requirement of the borrower is the factor that decides which tenure he/she should go for. Below we will be discussing the information related to the type of funding you want. This will assist one in planning, preparing a budget, compare the available products and go ahead with your plan of availing a loan.


Short term loan

Long term loan

Interest rate

May have a higher rate of interest

Carry a lower rate of interest


Loans less than or equal to 24 months

Loans for more than 24 months tenure


For short term needs of lesser amount

For long term needs involving a huge amount


It can be easily accessible online. It can be obtained in a very short span of 24-36 hours.

It can be accessed online as well as offline


No collateral is required 

Collateral may or may not be required

EMI Amount 

EMI is higher as the repayment tenure is less

Installment is reduced so EMI payable is lower.

Usage restriction

There is no usage restriction

There is no restriction on usage

Which loan can be chosen?

Longer-term loans are better for building credit records as the loan is spread over a period thus making the EMIs affordable. When loan repayment is done timely it has a positive impact on loans.

How about the alternate overdraft facility?

For borrowers seeking funds on the move can opt for personal overdraft. Overdraft facility is like credit card. It allows to withdraw money multiple times and offers to make the repayment depending on the availability of funds. One can pay interest only on the amount that has been utilized.  On process of loan application loan obtained ranging from Rs 1 lakh to Rs 10 lakh basis creditworthiness.

Advantages of personal overdraft are:

  • No high EMIs.

  • There is requirement of minimum documentation.

  • Loan processing and disbursement are quick and hassle-free.

  • The interest rates are comparatively lower as compared to credit-cards and short-term loans.

  • Overdraft facility allows multiple withdrawals. Applicable interest is only for the amount you withdraw and only for the number of days you use the funds.

Personal loans can be availed by individuals for various needs like for medical emergency, for marriage ceremonies, for higher education, for home renovation. 

Pune or Poona is the state in Maharashtra also known as “Queen of the Deccan” which has attained its high importance when it became the capital of Bhonsle Marathas in the 17th century. Being the second largest city of Maharashtra, Pune is known for its rich Maratha culture. It is also referred to as India’s Motor City which is home to some of the international automobile companies. ’s economy is considered to be the eighth-largest metropolitan economy of India. Personal loan in Pune is available to both salaried and self-employed individuals.

Personal loans can be utilized for many purposes and there is no restriction for the same. It is therefore readily available and is collateral-free. The features and benefits of personal loan differs from lender to lender. An online personal loan is easily available within 24-36 hours on the application of loans. 

Post availing personal loan it can be closed as per the terms and conditions laid down by the lender. After six months of availing the loan, it can be foreclosed. It is important to understand the terms and conditions laid down by the lender carefully.

Types of Personal Loan Closures

Loan closures can be classifieds into the following types:

Regular Closure – When the borrower makes the payment in installments for the full tenure as stated in the loan agreement is known as Regular closure. There is no additional charge involved in this type of closure.

Pre-closure or Foreclosure – When an individual has lumpsum money to pay off the debt of personal loan, they are required to pay the charges if it is before 6-12 months from the date of loan sanction. There is flexibility with online lenders.

Let us find out who can avail of a personal loan.

Eligibility to apply for a personal loan

  1. An applicant should be in the age group of 23-55 years of age.

  2. He/She should be employed in the same organization for a period of six months.

  3. A minimum of one year of job experience is required.

  4. It should be able to efficiently manage to pay off both the debts of loans (home loan and personal loan simultaneously).

Documents required to apply for Personal Loan

  1. Identity proof- PAN Card/Aadhaar Card/ Voter ID/Passport/Driving license.

  2. Address Proof- Phone bill/Electricity Bill/Rent Agreement/Passport.

  3. Last three months salary slips.

  4. Last six months' bank statement.

  5. Employment continuity certificate.

Bajaj Finserv offers personal loans at affordable interest rates starting at 10.50%. Features of personal loan from Bajaj Finserv:

Minimal documentation – Bajaj Finserv offers a loan with minimal documentation. It ensures ease of application process.

High loan amount – Without putting up any collateral Bajaj Finserv offers personal loans up to Rs 37 lakhs.

Pre-approved offers – For existing customers, the lender offers pre-approved loans.

Bajaj Finserv offers loans for Wedding, Travel, Medical emergency, Doctors, Chartered accountant, self -employed.

Eligibility criteria for Bajaj Finserv personal loan

  • Must be a resident of India

  • Must be at least 23 years of age

  • Maximum age should be 55 years

  • Applicant must be residing in any of the eligible cities

Documents required for a loan application:

  • PAN card

  • KYC documents—Aadhaar, Driving License, Voter ID Card, etc

  • Passport-sized photograph

  • Additionally, form 16 or the latest salary slips

  • Bank account statement of the previous 6 months

Self-employed individuals are required to produce:

  • Certificate of business existence

  • Business financial documents

  • Bank account statements

  • Certified copy of previous years income

  • Bank account statements

  • Certified copy of previous year income tax return

Individuals can reach out to the customer care number of Bajaj Finserv at 1800-103-3535. Individuals having any grievance can reach out to the customer care executive.

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Joined: January 19th, 2020
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