The benefits of instant personal loans and why it’s getting popular day by day?
Personal loans are widely available, require no collateral, and have low-interest rates. Furthermore, they are simple and quick to set up. You are free to use your loan money however you see fit.
The pandemic gave rise to several socio-economic challenges such as continual lockdowns, job losses, and negative impacts on small and large businesses. This is where instant personal loans came as a savior to help individuals fulfill their needs digitally within the comfort of their homes.
An instant personal loan is an excellent way to fund your emergency needs. A personal loan can cover the cost of an unexpected medical issue or a large-ticket purchase. So, it is easy to see why borrowers are increasingly favoring instant personal loans. Personal loans have various advantages, including their versatility, ease of availability, and simple application process. When you apply for a loan online, most loan apps and websites will tell you how much you may borrow based on your monthly income. You can submit your paperwork online to get an instant personal loan.
People are increasingly turning to the best instant loan app in India to meet their financial necessities. So, let’s look at the factors contributing to the popularity of personal loans.
1. Lightning fast approvals
“Speed” is the buzzword, and instant personal loans take this idea forward by providing you the funds required quickly, and in a few cases, within a few hours!
A personal loan takes far less time to process than other loans, say a home loan, which can take 3-4 weeks. This ease is associated with fewer regulatory and appraisal formalities related to personal loan eligibility. Lenders assess only your repayment capacity and grant you loans as the end use of funds is not ascertained. As a result, they are your greatest bet for satisfying your immediate cash or payment requirements.
2. Light on collaterals
Personal loans are unsecured, which means they do not require collateral to be obtained. This is why personal loan approvals are easier to get than other types of loans, such as home loans, auto loans, and so on. In addition to income assessment, this also requires the lengthy process of ascertaining your fund utilization and verification of collateral offered.
To ensure a secure settlement, the financial institution or lender gives the loan access to the claimant’s cash flows and the consistency of their revenue. Non-banking financial institutions and fintech start-ups in India promise collateral-free loans to first-time applicants with no previous track record to support personal loans.
However, as a consumer, you should know that unsecured loans are riskier for lenders, so interest rates are typically higher to cover the higher inherent credit risk.
3. Versatility of use
You are free to use the loan amount to meet any personal life needs. A personal loan will be helpful regardless of the use case, whether for an iPhone purchase, a Swiss vacation, or a house renovation. Furthermore, unlike home or auto loans, a single loan can be utilized for many purposes. The point to stress here is the non-requirement of end-use assessment, which is associated with other targeted products. Furthermore, changing plans or canceling your expenditure requirements will give you the cushion to repay your loan prematurely and be free of debt.
4. Gives your credit score a boost
If you have a low credit score or are new to credit, taking out modest personal loans and repaying them on time is a convenient method to improve your score. Regular repayments and increasing your credit association will positively impact your credit score, which will help you avail of other loans and facilities with stricter credit history requirements. However, you must obtain a loan amount within your repayment capacity. If not, missing EMI payments can harm your credit score.
5. Minimal documentation
One of the most significant advantages of personal loans is minimal documentation requirements. Most personal loans require very few KYC and income documents. On top of this, instant personal loans, those available online, have systems to capture your data from the digital forum, thereby minimizing the requirement of document submission. For example, Aadhaar data can be fetched through eKYC mode, PAN data can be verified from the NSDL site, and income data can be pre-fetched from account statements.
Most of the processes are automated, including document execution, which traditionally has been too cumbersome and signature heavy. Now digital signatures are in vogue, owing to accommodation in the recent IT Act, and hence, digital document execution is taking center stage.
6. More convenient all the way
It is now possible to avail of funds through online personal loans within the comfort of your home. The end-to-end process of getting a personal loan, from application to document execution and disbursement, is as simple as selecting a product, keying in your information, and just following the step-by-step process.
Personal information combined with your income data and repayment history enables the automated loan processing engine to provide you with a suitable amount of loan and tenure per your requirements. Even commercial banks are now leveraging digital automation and attracting potential customers, mostly millennials, to their products.
7. Effective debt consolidation
One of the main reasons why personal loan applications are so popular in India is debt consolidation. Many people are in debt due to the availability of different loan products. A personal loan might help you in this situation by consolidating all of your bills and cleaning up your credit portfolio. Furthermore, personal loans have a lower interest rate than other types of credit. So, you can use this financial product to pay off your high-interest loans.
Many consumers use personal loans to pay off credit card debt and foreclose other debts to pay off a single loan EMI rather than keeping track of and repaying many EMIs. As a result, personal loans can be useful for debt consolidation.
So, if you’ve read this far, you would now know the various benefits of obtaining an instant personal loan and why it’s being favored by individuals. Their lack of collateral, easier and quicker availability than other lending choices, low-interest rates, and other factors will work in a beneficial way to fund your demands without causing you any hassles. As a result, if you intend to take out a personal loan, you should deepen your research, and compare interest rates, loan tenures, quality of service, and platforms, among others, to uncover the finest personal loan apps available. This will help compare interest rates and choose the loan that will be easiest to repay.