Posted in Finance, Accounting and Economics Terms, Total Reads: 102
Definition: Spot Loan
Spot Loan is a short term mortgage loans provided to the borrowers for purchase of small house units in an apartment or payment of their housing rents or any other purpose. It is a very short term loan which has a repayment period of within a year. There are fixed weekly or bi weekly payments for a specified time within a year (depending upon the agreement).
To grab such a loan the borrower has to have a source of income and a bank account in an authorized bank under the name of the borrower.
They provide instant loans to the borrowers in a time span of a day and sometimes in minutes on just looking at their credit ratings and job or business details.
Unlike traditional process of going to banks and submitting the details, the entire loan process can takes place on phone calls and all necessary details are shared on the online application forms and documents are to be submitted online and the confirmation is provided to the customers on calls. The amount is then transferred to the borrower’s bank account in a span of 24 hours after the approval of loans. This makes the loan process faster and just a matter of few minutes. The payment of loans can be done easily through online deposits or cheque deposits in the loan provider’s account.
The interest and principal payment all are included in the fixed interval payments so no separate principal payment has to be done at the end of loan tenure and no extra prepayment charges are charged.
It is flexible enough as it provides options for selecting the time span for the repayment of the loan.
But the drawback of such scheme is it charges a large interest and processing fees up to 400-500% on the borrowed amount.
The amount provided under the spot loans are very small as compared to normal mortgage loans provided by banks.so it is not suitable for those borrowers who are looking for a hefty amount.