All you need to know about Instant personal loan –the do’s and don’ts
Now a day instant loan has become the norm of the day. It is a kind of personal loan offered by lenders through a very simple and short approval process. It is evident from the name that these loans are disbursed fast in the personal savings account of the customer. Certain loan application offers these instant personal loans to meet the short term economic need of the users. The app-based loans function in a simpler and faster way when compared to any traditional bank. This online personal loan is an unsecured loan and hence users do not need to provide any kind of security with an asset such as any vehicle or a home.
These days it is quite easy to take personal loans, thanks to the interest rate being high. Anyone can apply for an instant cash loan from the convenience of their home or office. The only thing required is a Smartphone along with a good internet connection. The entire approval and application process has become much quicker. Certain criteria and some minimum documentation such as address proof, identity proof, and income proof may be needed for you to be eligible to get an instant personal loan.
Here are a few ways that will inform you on how to get an instant personal loan.
- Use of the Loan app – First you have to download the loan application from the Apple app store or Google play store and get registered. Then you need to enter the loan details after uploading the required documents. The value of an instant loan may range from INR 10,000 to INR 4 lakhs. The loan tenure can vary from 60 to 360 days. The main point here is that the total transaction is done digitally. You do not have to physically visit any branch or bank. After submission of the request in the loan app, your request will be reviewed and you will be notified about the status of your loan. The requested loan amount will directly get credited to your bank account if approved. This is the simplest and easiest way to get an instant cash loan.
- Credit card loan – Another method that you can explore is by using credit cards. If you have a credit card with a good credit balance you may get a cash advance from the card. This is a quicker process to take an instant loan if you already own a credit card. You may withdraw the cash from ATM by using a credit card. All of the banks offer this facility. But the most crucial point here is that the interest charges levied on cash withdrawal from the credit card are much higher than that of the personal loan. So it is best to use the credit card only in times of your most crucial period and not hamper your credit score.
- A loan from a known person –Apart from the app or credit card one convenient way can be borrowing from a known person. When in need you may ask for an instant cash loan from your friend or family. Before taking the loan discuss and agree upon clear terms and conditions, as this will comprise of your loved ones. Moreover, if you take the loan from a known person it will save you a hefty interest charge.
You must consider some important things before taking an instant loan:
Comparison of offers to get the best rates – The equated monthly instalment (EMI) can be lower if the interest rates are less. Financial experts always advise that EMIs must be within 40% of your total take-home salary so that you can repay on time. You must select the most competitive option after comparing the personal loan interest rates provided by different lenders.
Planning of a workable repayment strategy – There are many personal loan EMI calculator available online, use it to calculate your EMIs. Once you know the EMI you can evaluate the loan amount you need to take based on your repayment capacity. Always scale-in factors such as your payroll, expenses, and increments and chalk out a proper repayment plan. Opting for a lender who will increase your EMI when your income increases, always help in getting rid of the debt much faster.
Assessment of terms of the loan – Make sure you are well aware of all the charges like penalties applied on delayed monthly instalments, processing fees, partial-prepayment charges and others that may eventually increase the effective loan cost.
Go for the straight forward application process – Complicated paperwork and prolonged loan application processes can cause a delay in access to funds when you need it. The online personal loan needs minimum official documentation and provides quick disbursal.
Choose the loan tenure wisely – You should always remember that while a longer tenure helps in EMI reduction, a shorter tenure can decrease the overall costs of your loan. Depending on your financial situation you must choose the tenure and also a lender who will allow prepayment of the loan at no extra charges. This is needed in case you have additional funds and want to reduce the debt burden.
Try and avoid the following scenarios.
Missing EMIs – Missing on a single monthly repayment makes you a defaulter and may result in hefty fines, reducing your credit score and will negatively affect your eligibility for a personal loan in future.
Borrow from unlicensed lenders – There will be several seemingly alluring loan offers available in the market. But be aware of these exceedingly lucrative offers, they may not be reliable. Always take loans from authentic financial institutions only. In this way, you can avoid any other inconveniences and hidden charges.
An instant loan helps you in tiding over hard financial situations, but you should be capable of repaying it in the future. Inability to repay a loan can turn into a curse later on. Also before applying ensure that you validate the credentials of the lender.