What is a bridge loan: Generally, a large loan is taken as a loan to buy a house, car, treatment, or any expensive property, but sometimes we also need a small amount (for a down payment, etc.). If you also need instant money for a short tenure, then a bridge loan can prove to be a great option for you.
A bridge loan is basically a short-term loan, which can be used to meet your immediate financial needs. This is a better option for those who do not want to bear the burden of long-term debt. If you have a regular source of income through which you can meet your financial needs sooner or later, a bridge loan can be a good way to avoid traditional loans.
A loan can be taken from three weeks to one year.
The amount and interest rate offered under a bridge loan completely depends on the borrower's repayment capacity. A bridge loan is also popularly known as 'swing loan,' 'interim financing,' or 'gap financing.' These loans are taken for an average tenure of 2 to 3 weeks and can be extended up to a period of 12 months.
For this, you will need to complete a loan application form and send it to your bank. Along with this, you will also need to provide proof of receipt, proof of ownership, proof of address, and photographs of passport size. One percent of the loan will be repaid as a processing fee in May. The amount of the loan depends on your ability to repay.
Pay in EMI
The borrower has to repay the loan by paying Equated Monthly Installments (EMIs) or paying interest until the entire loan is repaid. The interest rate will depend on the total amount of the loan and the ability to repay the loan. In addition, security also affects the interest rate. The current interest rates on bridge loans range from 9% to 18%. A processing fee is charged for these loans, ranging between 0.35% to 2% of the loan amount.
Which banks can be a better option
HDFC Bank Bridge Loan is a good option for short-term loans in India. This loan, given for a tenor of two years, can be availed from any HDFC Bank branch across the country. In this case, the interest rate on real estate loans is 12.30 percent, and the interest rate on commercial property loans is 13.15 percent per annum.
At the same time, SBI Bridge Loan offers loans up to Rs 2 crore for a tenure of two years. The interest rate here (starts at 9.90% for the first year and 10.90% for the second year) is slightly lower than normal.
You can get caught in a big debt trap.
You can get instant cash through a bridge loan, but you may have to deal with rising interest rates. If you fail to repay the bridge loan on time, you can get caught in a huge debt trap.
If you liked this article, or if some information is incomplete, comment in the comment box.
You must be logged in to post a comment.