Introduction 

There are times when a lot of us come across some unexpected personal expenses for which we may not have enough funds. An instant loan could be the right option in such situations. These are easy to apply online and are for shorter tenure involving quick processing. Most instant loans also require minimum documentation and are disbursed quickly.

What are the Different Types of Instant Loans?

Some of the common types of instant loans are as follows:

  • Short Term Personal Loans (STPLs): STPLs are starting to get popular in India and they come in the form of a loan which is as low as Rs. 1,000. These are being offered by many NBFCs and digital lenders. It is an ideal choice when it comes to dealing with month-end financial crises. To avail this loan, you need to apply online or through the app and upload your necessary documents and the money will instantly get disbursed to your account

  • Personal Loans: This is the most common unsecured loan that is availed by the masses to deal with financial crises. Many banks and NBFCs offer this loan starting from Rs. 30,000 to Rs. 40 lakh and sanction the loan based on your eligibility. The interest rate on this loan is generally higher as compared to secured loan and the tenure is flexible to repay the loan as per your convenience. You can compare and apply for personal loans at Paisabazaar.com

  • Top- Up Loan: One can use this loan to get a top-up loan and avail extra funds over and above existing loans such as a home loan or personal loan. As the bank already has all personal details and documents, it is easy to process this loan just by filling a form and completing a few formalities

  • Loan Against Credit Card: If you have a credit card, this type of loan may be offered to you by the credit card provider depending on your repayment history and credit card limit. The pre-approved loan requires minimum processing and the funds get disbursed quickly. You can also contact your credit card lender to apply for this loan

  • Loans Against Savings and Insurance: Many banks and NBFCs offer this loan against your small savings instruments like insurance policies, FD or National Savings Certificates (NSCs). This loan is also known as the demand loan. However, the loan amount that you get depends on the maturity value of your policy or NSCs. If you have a clean repayment record, you may get a loan amount up to 90% of your saving value

What are the Top Features and Benefits of Instant Loans?

  • Paperless Approval: While applying for a personal loan, you may need to submit the required paperwork to the lender, after which your loan request will be processed. In contrast, when you apply for an instant personal loan online, all the documents will have to be uploaded online, thus making the entire transaction paperless. Also, if you are a pre-approved customer, you will be required to submit minimal or nil documentation.

  • No Collateral: An instant personal loan is a type of unsecured personal loan. Thus, you will not have to submit any security or collateral when applying for an instant personal loan.

  • Instant Disbursal: If you are in immediate need of funds, it is advisable to apply for an instant personal loan since the approved funds will be disbursed to your account promptly.

  • Minimal Processing Time: The processing time for instant personal loans is significantly lesser than the processing time for regular loans.

  • Customizable Loan Tenures: In most cases, when you avail an instant personal loan, you are offered a flexible loan tenure. Thus, you can choose a repayment tenure as per your convenience, subject to the lender’s maximum loan repayment term.

  • Flexible Loan Amounts: Individuals applying for an instant personal loan can apply for a loan amount of their choosing, subject to the loan amount falling within the minimum and maximum loan amount specified by the lender.

  • Competitive Interest Rate: If you have a good credit score, you will likely be offered a loan at an affordable interest rate. This will help you keep the overall cost of the loan low.

What are the Important Points to Note on Instant Loans?

Before applying for an instant personal loan, it is necessary to compare the loans offered by different lenders. Here are a few points that you should take into consideration when comparing instant personal loans:

  • Processing Fee: Almost all banks and financial institutions offering instant loans charge borrowers a one-time processing fee. If you are charged a high processing fee, you will need to pay more for your loan.

  • Interest Rate: The interest rate that is charged by a lender can affect the total cost of the loan. Thus, make sure to check the interest rate at which the loan is offered before applying to a particular lender.

  • Default Penalty: If you do not repay the EMIs as per schedule, the lender may charge you a default penalty. Hence, it is important to compare the default charges levied by different lenders.

  • Repayment Flexibility: It is best to opt for an instant personal loan that offers repayment flexibility in terms of allowing you to make pre-payments or part-payments towards your loan amount, especially if you are intending to pay off your loan before the end of the loan tenure.

  • Minimum and Maximum Loan Amounts: When looking at instant personal loan offers from different lenders, ensure that you take the loan amount offered into consideration. For example, if you want to take an instant personal loan for Rs.15 lakh, you should only be looking at lenders that allow applicants to borrow up to Rs.15 lakh.

What are the Eligibility Criteria for Instant Loans?

Here are the eligibility criteria that one will need to meet to apply for an instant personal loan:

  • Credit Score: A good credit score is crucial for an instant personal loan at an affordable interest rate. It is advisable to maintain a credit score of over 750.

  • Age: Prospective borrowers should meet the age requirements specified by the lender to be eligible to apply for an instant personal loan. The age limits may vary based on whether you are a salaried employee or self-employed individual. Thus, make sure to check the age requirements of various banks/financial institutions that offer instant personal loans.

  • Occupation: Instant personal loans are offered by most lenders to both salaried employees and self-employed individuals.

FAQs

  1. What are the benefits of an instant loan?

An instant personal loan can be availed easily and it is time-convenient. You can complete the entire loan application process online or office and at any time. If your loan application is approved, the loan amount will immediately be disbursed into your account.

  1. How will I receive the disbursed loan amount once my application has been approved?

In most cases, the loan amount will be disbursed to your bank account, provided that the loan application has been approved.

  1. Can I pre-close the loan before the completion of the loan repayment period?

Some lenders will not allow you to pre-close the loan. If you are allowed to make pre-payments or part-payments, you may be charged a penalty for doing so.

  1. How can I increase the chances of getting my loan application approved?

You must aim to have a credit score over 750 to increase the chances of a loan application being approved. Make sure to also check the lender’s eligibility criteria to know whether you qualify to apply for the loan.

  1. How does the EMI for an instant loan get calculated?

The EMI for an instant loan is calculated by taking the loan tenure, loan amount, and rate of interest into account. You can use the EMI calculator tool, which you will find on the official websites of banks/financial institutions or through a third-party financial services website.

End Note

Instant loans are short-term loans that you can apply for especially when you are looking for an easy and convenient financing option. You must know how they work, including eligibility requirements, before applying for one. The amount you can borrow is generally small, and they may sometimes come with higher interest rates.