Finance

The Pros and Cons of Instant Loans: A Comprehensive Guide

The introduction of instant loans to the personal financial lending segment has turned out to be a boon for individuals across all borrowing segments. Typically, these are instant personal loans that make quick financing available to individuals needing funding during emergencies. 

These instant money loans come with some best features that are making these loans highly popular among borrowers. Along with instant approval and quick disbursals, instant loans offer high transparency, easy management, and simple repayment terms. However, they are not free of a few pitfalls. 

Before availing an instant personal loan, you must know the pros and cons of these lending instruments. 

Advantages of an Instant Personal Loan

Quick approvals and instant disbursals

Instant personal loans are designed for quick availability and thus their approvals come by immediately. You need to meet all the criteria set by the lender and you must furnish the documents correctly in the requested format. The approval typically comes within a few minutes of application. This makes them a perfect choice for emergency needs.

Fast disbursals within 24 to 48 hours

Post the approval of this instant money loan, the disbursement of the financing to your bank account comes by quickly too. Typically, you would receive the funds in your account within the next 24 to 48 hours of approval. You do not need to visit the financial institution to get your loan approved or disbursed. This makes it very convenient for the borrowers to avail these loans from anywhere, and at any time.

Financing of decent value

These instant loans are also available as financing avenues of high value, which makes meeting lump sum funding requirements possible. When applying for an instant personal loan with an online loan app, you can expect to receive financing of up to Rs.1.5 Lakh based on your repayment capacity and financial standing.

Collateral-free funding

One of the top advantages of an instant personal loan is that it is available as a collateral-free financing option. When availing the loan, you thus do not need to worry about risking your personal assets to avail the funding and can secure it based on your financial standing and credit history only.

Affordable rates and charges

Instant loans are also provided as affordable financing options today, attracting competitive rates of interest and other fees and charges set nominally. You can further negotiate with your lender for lower rates on the advance if you have any financial, income or employment leverage to present.

Repayment flexibility

Not to mention, an instant personal loan comes with the flexibility of repayment as well. You can choose a suitable tenure of up to 2 years to repay the advance while easily accommodating the EMIs within your monthly income.

Minimum eligibility and document requirements

At last, to avail the loan, lenders usually require you to meet minimum eligibility and documents. Fulfilling a handful of income, identity and occupational requirements is enough to secure the funding with ease. Also, you can submit these documents digitally, without the need of visiting the lender in person.

Disadvantages of an Instant Money Loan

While there aren’t many disadvantages to an instant loan, there are a few cautions you must note.

  1. Delayed payments can impact your credit score

Any delays in the repayment schedule of your loan can impact your credit profile significantly. This might make your future borrowing difficult. In addition to that, you will also have to pay a late fee in case of delayed payments.

  1. Loan amount

Though instant money loans offer you a loan amount ranging from Rs. 10000 to Rs. 1.5 lakh, it might not suffice your need. In case, where you need a higher loan amount, you must look for alternate options. 

  1. You may get a high-interest rate

Not doing the right market research might get you a loan with high-interest rate. Thus, it is very important to have the basic financial knowledge and study the market before availing an instant loan. This will help you get a better deal on your personal loan.

Conclusion

Now that you know the advantages and disadvantages related to an instant personal loan, you can make an informed borrowing decision. When choosing a loan amount or a tenure, you can use financial tools like the personal loan EMI calculator and eligibility calculator available for free online. 

These financial tools will help you make sound borrowing decisions. Based on these calculations, you can proceed to apply for the loan with your selected lending institution. It is optimal to apply for an instant money loan through a dedicated online loan app as it assists with faster applications, approvals and disbursals.

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