A quick personal loan, popularly known as an instant loan, is a loan that can be taken for personal usage. Many banks or NBFCs offer this kind of loan to individuals between 21 and 63 years old. The eligibility criteria for a personal loan is simple and hence covers a large number of people, making it the kind of loan that you can rely on for any emergency funds. Let’s have a deeper look at why and when people take personal loans and what are its pros and cons.
Popular reasons for opting for a personal loan:
Below are some of the most popular reasons people take an instant personal loan online these days:
1) Buying gadgets:
With people spending a good amount of time on their phones every day, it is natural for them to want expensive gadgets. However, investing in a gadget can be a luxury to many. In such scenarios, it is wise to count on a personal loan.
2) Vacation purposes:
Everyone needs a break from their hectic, fast-paced life. When you do not want to spend your savings on vacation, a personal loan is also an option that is considered.
3) Medical emergencies:
Medical expenses are unavoidable. When people do not have the money required in case of a medical emergency, a personal loan comes to their rescue,
4) Paying off ongoing debts:
In some cases, when a person has multiple ongoing loans, they prefer taking up a personal loan to pay off all the other loans in order to manage the debt better. This consolidation enables the borrower to manage the loan amount more effectively, as he is only required to pay one EMI.
5) To manage wedding expenses:
Weddings can be expensive, especially in a country like India, where it is customary to spend as much as you can on the wedding ceremony. If you do not have enough savings for a lavish wedding, you can take an instant loan for that too.
Pros of taking a personal loan:
Following is the list of pros of taking a quick personal loan:
1) No restriction on the usage:
Most people apply for an instant personal loan as it does not come with a set of fixed reasons that the loan amount can be used for. You can opt for this loan for any emergencies or personal expenses. Whether it is a medical emergency that you need some urgent funds for or a vacation that you have been waiting to go on, an instant loan can be of great help to you. The lenders provide full flexibility of usage on the loan amount.
2) Fast disbursal of the loan amount:
These loans are also known as quick personal loans because of how swiftly you can get them. Once you fill in the application and submit the documents, you are only required to wait for the documents to be verified and the application to be approved. Post this; the amount gets transferred directly to your bank account without any hassle. Some lenders even promise to sanction the loan within a matter of a few hours.
3) Quick approval:
Personal loans online offer quick approval. The online application process eliminates some time-consuming steps from it, making the approval process swift. The only time taken is in verifying the documents uploaded by you. The application approval is fast, contrarily to traditional loans where you had to wait for days or even weeks for approval on your loan.
4) Easy paperless documentation:
Unlike conventional loans, personal loans don’t require you to gather endless documents, get them xeroxed, sign those xeroxed copies and take them to the lender’s office. The entire documentation process is paperless and only requires you to upload the documents online on the lender’s portal. Moreover, it does not require endless documents, a list of 4-5 necessary ones mentioned on their site needs to be submitted.
5) No need for collateral:
If you go to apply for a home loan, the home that you are purchasing with the loan amount is kept as collateral till the time you pay off the debt. Similarly, many other major loans require you to present collateral to the lender as a security in case of failure of the repayment of the loan. However, while applying for an online personal loan you need no such collateral. The loan is given you to depending on your credit score. Your lender asses your financial credibility by having a look at your CIBIL and lends you the loan.
6) Easy EMIs:
At the time of applying for an instant loan, you get EMI options to select from as per the tenure that you choose. You can pick the suitable EMI option for you as per your paying capacity. If you select a repayment tenure of a longer duration, you will get affordable EMIs. However, be careful and try to keep the repayment tenure short, as a longer repayment period automatically means an increased interest rate on the EMI.
Cons of taking a personal loan:
Following is the list of cons of taking a quick personal loan:
1) Too many loans can lend you in a debt trap:
Online personal loans are easy to take, and therefore it might seem tempting to fall back on one whenever you are in need. Opting for too many loans can lend you a huge debt which can become extremely difficult to pay. If borrowing money through personal loans becomes a habit, it has the tendency to go out of hand in no time.
2) Higher interest rates:
Since these loans are easier to get, they come with a price. This price is nothing but the interest rates that come attached to your EMIs. The interest rates can be higher on personal loans, given the advantages they have to offer. It can also be higher in cases where the borrower’s credit score is low. Moreover, since the lender doesn’t ask for any security for this loan, the interest rates tend to be higher.
An instant loan or a quick personal loan can be easily borrowed from a bank or NBFC. These loans can be used for flexible reasons. You are also not required to provide any security in the form of collateral to obtain this loan. However, one should avoid taking a loan unnecessarily, as too many loans can lead you into a debt trap.