In today’s fast-paced world, unexpected expenses can arise at any moment, leaving many individuals searching for quick financial solutions. Instant personal loans have emerged as a popular choice for many borrowers in need of immediate finance.
But before you apply for that quick loan, here is what you need to know about instant personal loans.
Availability: Instant personal loans are readily available through various financial institutions, banks, and online lending platforms. The digitisation of banking and financial services has made it easy for individuals to apply for loans from the comfort of their homes or offices.
With just a few clicks, borrowers can complete the application process, thus reducing the need for physical paperwork and lengthy approval times. If you are an existing customer of a bank, you can get pre-approved personal loans at reasonable rates of interest.
Processing Time: One of the key advantages of instant personal loans is their swift processing time. Unlike traditional loans that may take days or even weeks for approval, instant personal loans are processed quickly within a few hours of submitting the application. In many cases, borrowers receive approval within minutes of submitting the application. The funds are then disbursed promptly, enabling borrowers to address their financial needs without delay.
The processing time for personal loans have become shorter by using Aadhaar for the know-your-customer (KYC) process. It eliminates the need for physical documentation and manual verification.
Rate Of Interest: The rate of interest on personal loans range anywhere between 11 per cent and 24 per cent, and depends on factors, such as credit score, loan amount and the income of the borrower.
The rate of interest on personal loans are on the higher side, since they are unsecured loans. For instance, for a loan of Rs. 10 lakh at a rate of interest of 14 per cent for a five-year tenure, the monthly interest will be Rs. 23,268, and the total interest payable will be almost Rs. 4 lakh.
Loan Amount: The loan amount offered through instant personal loans varies, and depends on the lender’s discretion and the borrower’s creditworthiness. Typically, lenders offer loan amounts ranging from a few thousand to several lakhs of rupees. Borrowers should carefully evaluate their financial requirements and borrow only the necessary amount to avoid unnecessary interest burden.
Risks: While instant personal loans offer a quick and convenient borrowing option, they do come with certain risks. The primary concern is borrowers falling into a debt trap.
The ease of obtaining instant loans can tempt individuals to borrow beyond their means or borrow without a clear repayment plan, leading to financial strain. It is crucial for borrowers to assess their financial capacity and only then take loans that they can comfortably repay. Missed equated monthly instalments (EMI) can adversely affect one’s credit score as well as result in penalties.
Recently, there have also been instances of fake or unregulated loan apps that offer loans to individuals at attractive rates of interest and then either steal their personal information, or use unfair means to recover these loans.
As a rule, always take a personal loan from an RBI-regulated financial institution, which could either be a bank or a non-banking financial company (NBFC).