Everyone needs a financial boost to cover their requirements. Especially for all types of big-ticket expenses, you might need a lump sum at one time. Whether you’re buying a house, buying a dream car, financing a wedding, or finding higher education, you might worry while carrying out the expenses. In such cases, an instant personal loan is the best option to look for. However, getting a personal loan instantly can be tricky, especially if you do not have the requisites, the required documents, and the eligibility.
Getting a personal loan instantly in India requires benchmark credentials like credit scores, credit histories, etc. You should know the eligibility criteria, the documentation process, and any extra charges like stamp duty and processing fees, etc. On top of that, you must compare all the interest rates of different lenders and choose the one that suits you the best.
Do you want to know the pros and cons of paying a personal loan instantly? In this article, you will learn about instant personal loans, their benefits, and their downsides.
What is an instant personal loan, and what is its significance?
A personal loan is financial assistance provided by a lender to cover all of your personal needs that require a lump sum. The lending institution, in return, charges you a specific interest rate on the principal amount provided. You must repay the loan to the lender monthly until the entire debt is repaid. Instant personal loans have a loan tenure of about 12 months to 84 months, and accordingly, the EMI amount is set for the borrower.
When you apply for a personal loan instantly, you don’t have to pledge your security or assets to get a loan amount. So, even if you lack collateral, you can still get a personal loan. On top of that, you can use the amount for various reasons without stating the reason to your lending institution. In India, there are several lending institutions where you can apply for a personal loan instantly, like Banks, Non-Banking Financing Companies, Private Financiers, etc.
Now that you know the meaning and significance of going for a personal loan instantly, you should know the pros and cons of applying for a personal loan.
What are some of the merits of going for a personal loan instantly?
There are several benefits to going for an instant personal loan, and they are:
Appealing interest rates
To make an instant personal loan more appealing, banks and other lending institutions charge borrowers a nominal interest rate. This also helps lending institutions attract more customers to take up their offers. The interest rates vary from lender to lender, but most charge between 8% per annum and 25% per annum.
Most lenders try to provide you with high flexibility when you go for a personal loan instantly. The flexibility could be provided to you while choosing the loan amount, loan tenure, EMI type, etc. In addition to that, you also have the liberty to choose the loan type while going for an instant personal loan. For instance, the “Flexi Option” allows you to pay the interest on the amount you use instead of paying the draw for the entire principal amount.
No requirement for collateral
You won’t be asked for collateral while applying for a personal loan. You don’t need to pledge your assets, like your properties or shares, instantly while going for a personal loan. Even if you don’t have a pledge-worthy asset, you can still apply.
Flexible loan tenure
The loan tenure of the personal loan is also flexible to ensure the borrower’s convenience and suitability. You can choose the repayment term between 1 year and 7 years, according to your comfort.
Since it is an instant personal loan, your loan amount is quickly disbursed into your bank account within a day. These loans involve minimal documentation and the least amount of paperwork, which makes it possible for you to get approved and get the loan amount as soon as possible.
What are the demerits of applying for a personal loan instantly?
There are certain limitations to going for a personal loan instantly, and they are:
Not apt for some borrowers
Since the interest rate varies between 8% per annum and 25% per annum, you might fall on the higher side, depending on your bank’s charges. Some banks charge a high interest rate, especially if they find the borrower less creditworthy. Also, if you don’t have a decent credit score of about 750, you might face difficulties instantly getting a personal loan at a nominal interest rate.
Most personal loans come with additional charges like processing fees, prepayment and foreclosure charges, and stamp duty charges. Besides that, several document-related fees and legal charges are involved in instant personal loans. Before knowing about all these charges, the borrower can put an additional financial strain on the monthly budget.
If the borrower obtains a personal loan for expenses like buying expensive gifts, financing tours, or celebrating a festival, this adds to their financial distress.
The Bottom Line
Though going for a personal loan instantly might help you during a financial crunch and help you gain leverage, you should be aware of the pros and cons of going for it. It is a good move if you are applying for an instant personal loan to finance higher education or invest the money in a business venture. You should also try to improve your credit score and pay all your dues and pending credits to get a better interest rate.
You should use an instant personal loan calculator to compare different offers from the banks and see what’s best for you. If you want to know more about personal loans and want to go with a genuine lending corporation, you can go with Piramal Finance.