A short term loan can be defined as loan taken for a period of one year or less. These loans usually have greater flexibility of repayment within the stipulated tenure. While most banks offer loans for over 1 year, there are a few banks and NBFCs which are now experimenting with loans for shorter duration. This type of loan is very prevalent via individual lenders, which is primarily unorganised with interest rates of over 100%. However, now via Cashkumar, we have individual lenders offering short term loans or payday loans for shorter duration and affordable interest rates.

As things stand in the Indian financial system, there is a huge need for short term loans as these are not catered to by banks and NBFCs. Short term loans are a separate category with amounts ranging from Rs 10,000 to Rs 2 lakh with tenure between 1 and 12 months. Banks and NBFCs usually have a minimum cap of Rs. 1 lakh while giving a loan which is an impediment for people seeking lower amounts. Some NBFCs advance lower amounts but either the interest rates are too high for the loan tenure fixed.