Instant loans are a lifesaver when you need quick cash for emergencies or unexpected expenses. With just a few taps on your phone, you can get funds in your account without stepping out of your home. They’re fast, convenient and come with flexible repayment options.
However, like any financial product, they have their pros and cons. Understanding both sides will help you make informed choices. Let’s dive into the key benefits and risks of instant loans.
Why Avail Instant Loans?
Here are a few common reasons why many opt for online loans with instant approval facility.
● Covering wedding costs like venue, catering and celebrations. Instant loans ensure you can enjoy your special day without financial worry.
● Consolidating multiple loans into one online loan. This simplifies repayment and can reduce your overall interest rate.
● They allow you to own a vehicle and repay the costs in manageable instalments.
● These loans provide quick access to funds without collateral to manage any emergency costs.
● Funding home improvements or renovations. Personal loans make it easier to upgrade your home according to your needs.
● Financing education costs, including tuition and accommodation. Personal loans can help make higher education more affordable.
● Going on vacation without upfront expenses. Personal loans let you travel without worrying about immediate costs.
● Covering medical treatments or elective surgeries. Personal loans can help cover treatment costs, ensuring timely care.
● They can help you bridge the gap if you lack enough savings for the down payment for a home purchase.
Eligibility and Documentation
The requirements for instant loans vary across lenders, with some being more lenient. Here are the typical criteria and paperwork requirements for instant loans:
Eligibility
● Aged between 21 and 58 years
● Indian citizen or resident
● Salaried or self-employed
● Minimum income ₹15,000–₹40,000/month
● Credit score of 650 or above
● 1-year work experience, 6 months in current job
● Active bank account
Documentation
Key Aspects:
Here’s what these loans offer and what to look out for:
● Flexible Usage
These loans give you the freedom to use the money however you need.
● Additional Charges
Watch out for fees like processing, late payment, prepayment charges, etc.
● Exciting Interest Rates
Instant loans can have interest rates between 10% and 20%, reflecting their unsecured nature and quick disbursal.
● Prepayment Terms
Many lenders allow early repayment, but some charge penalties. Check the terms if you plan to clear the loan early.
● EMI Repayments
Repay the loan through monthly instalments, often auto-debited from your account to prevent missed payments.
● Collateral-free
With no assets required as security, instant loans are accessible, though interest rates tend to be higher.
● Minimal Documentation
Applications are hassle-free, with minimal paperwork like address, income proof, and PAN Card, all of which can be uploaded online.
● Effect on Credit Score
Timely repayments can improve your credit score. But, missed payments can lead to a drop, affecting future borrowing options.
Avoid These Personal Loan Mistakes
Here are the benefits and drawbacks of going for an instant loan:
Pros
● Rates ranging 8% to 25% per annum
● Flexible loan amounts, tenures, etc.
● No collateral is required, making approval easier and faster to secure
● Funds are disbursed quickly with minimal paperwork
● Repayment terms range from 6 months to 7 years
Cons
● Borrowers with lower credit scores may need to pay higher rates
● Processing fees, prepayment charges, and late fees can add to the costs
● Missed payments can negatively impact your credit score
● Easy access to funds might lead to unnecessary expenses
● High rates on small amounts can increase the total amount you must repay
Knowing these facts can help you make an informed decision when choosing an online loan for borrowing. But before heading to the application stage, you should check your credit score and only apply if it is above 730. With the OneScore App, you can do precisely this.
This is a smart lending app that gives you a customised loan offer as per your credit score. You can also use it to check your CIBIL and Experian scores and improve your credit score with personalised insights and tips. Apart from lifetime-free credit reports, you can enjoy the convenience of seeing all your credit accounts listed under one roof, which also enables you to identify any errors and thereafter report them to credit bureaus.
Apart from boosting your creditworthiness, this app gives you access to a personal loan of up to ₹5 lakh via its OnePL facility. Download the app today and get this instant loan with flexible repayment tenures and no documents!
