Instant personal loan: What are the different types, benefits, and features

There are times many of you come across a few unexpected instant expenses, which you are unable to fund through your own pocket. An instant personal loan comes in handy in such cases. These can be availed through online platforms and come with quick processing, i.e., they are generally disbursed on submitting the application on the same day. Additionally, the instant personal loan also requires minimal documentation owing to its unsecured nature.

What are distinct types of an instant personal loans?

Few of the common instant personal loans include:

       STPL (Short term personal loan): STPL has gained huge popularity in India as they disburse loan proceeds of as low as Rs 1,000. Such loans are usually offered by digital lenders and NBFCs. This is an ideal option when it is about meeting your month-end financial mismatches. To take up this loan, you require to apply online or via the personal loan application and uploading various documents, and money will get instantly disbursed to your savings bank account.

       Personal loan: It is one of the most common loans that can be taken to meet various personal or business financial crises. Many of the NBFCs and banks like Bank of Baroda provide this loan that ranges anywhere between Rs 25,000 and Rs 40 lakh. Note that these loan proceeds are sanctioned depending upon your personal loan eligibility. Bank of Baroda personal loan provides loan proceeds that vary between Rs 50,000 and Rs 15 lakh. The processing fee charged by BoB or Bank of Baroda personal loan is 2 percent of the availed loan amount with a rate of interest at 10.50 % p.a. for applicants sharing existing bank relations and at 12.50 % p.a. for applicants sharing a relationship with other banks.  

       Top-up loan: Existing personal loan borrowers can use the top-up personal loan option if they have further need for more loan proceeds by availing this loan. As lenders already hold all your details as well as documents, it is simple for them to process your personal loan just by filling different forms and completing various formalities.

What are the crucial features and benefits of an instant personal loan?

       Paperless approval: When applying for a personal loan, you might need to submit the needed documents to the bank lender, after which your personal loan request will get processed. In contrast, when you apply for an instant personal loan through online mode, all the documents get uploaded on the online platform, thus making your entire process of availing of instant personal loan paperless. Also, in case you are a pre-approved personal loan customer, you may not be required to provide any documents for processing the loan application.

       Zero collateral or security: An instant personal loan is a kind of unsecured personal loan. Thus, you may not require submitting any collateral or security when making an application for an instant personal loan.

       Instant disbursal of loan processing: If you are in instant fund requirements, it is recommended to apply for the loan as the approved funds will get processed to your savings account instantly.

       Minimal processing time: Processing time for the instant personal loan is usually lower than their regular counterpart.

       Customizable loan repayment tenure: In most of the events, when you take up an instant personal loan, you get provided with flexible loan repayment tenure. Thus, you must select repayment loan tenure depending upon your convenience to repay the loan amount and not blindly go with the maximum repayment term provided by the lender. This is because availing higher repayment tenure on an instant personal loan may lead to lower monthly EMI, which will increase your overall interest outgo.

       Flexible loan amounts: Individuals making an application for an instant personal loan can apply for the loan amount of their choice subject to the proceeds falling within the maximum and minimum loan proceeds as specified by the lender. Remember just to take up the required loan amount and not take more than the required proceeds. This is because a loan is a financial obligation, which must be repaid within the due date along with the interest amount. Failure to do so lower not just financial strains your cash flow but also lowers your credit score, which brings down your eligibility for other credit options.

       Competitive rate of interest: If you hold a strong credit score, you are likely to get offered an instant personal loan at an affordable rate of interest. This assists you keep your overall loan cost low.

What are the pivotal factors to consider when availing of an instant personal loan?

Before availing of an instant personal loan, it is crucial to compare the different loan offers provided by distinct lenders. Here are some of the points you must consider when comparing amongst different instant personal loan offers:

       Processing charge: Almost all the lenders offering instant personal loans charge the applicants a 1-time processing fee. In case you are being charged with a higher processing charge, you will have to pay more for the overall loan. Comparing this charge among lenders will help you avail of a lower processing charge, which thereby would reduce your overall loan cost.

       Rate of interest (ROI): The rate of interest charged by the lenders can impact your overall costs of a loan. Thus, ensure to check the rate of interest at which the instant personal loan is being offered to you by a specific lender. Opting for a higher interest rate leads to an increase in your overall loan cost. Thus, always try and opt for a lender offering you the lowest interest rate to keep your loan cost low. However, while doing so also factors in the processing charges. This is because, at times, lenders who offer lower rates of interest on instant personal loans usually try to make up by charging higher processing fees, which result in an overall enhancement of your loan cost.

       Default penalty: While you must repay your EMIs in full by the due date, in case of financial emergencies, many often fail to repay such EMIs. For such cases, ensure to check the default penalty. Compare this charge levied by distinct lenders.