Instant personal loans are one of the most sought after loans in India. They are available to both salaried and self-employed people. Upon showing proof of income, personal loan is disbursed. An instant personal loan is not a burden if utilized properly. It can be taken when there is a shortage of money. But care has to be taken to repay it diligently. Otherwise, credit rating can come down, and this will diminish the chances of taking any more loans.
Instant personal loans can be secured as well as unsecured. The former is covered by security such as collateral while the latter is not covered by any security. Secured loans are generally of a higher amount. Unsecured loans are generally of a smaller amount.
Secured personal loans may have a lower rate of interest than unsecured loans. Obtaining both types of loans is a fairly simple process. In India, banks, financial institutions, and non-banking financial corporations provide secured and unsecured personal loans.
The range of interest levied on instant personal loans is in the range of 10% to 18%. The rate of interest and quantum of funds proportioned to a person depends on several factors such as income, organization status, loan amount and repayment capacity. Generally, the higher the loan amount, lower is the rate of interest. Individuals associated with reputed organizations get offered attractive loans by banks and NBFCs. Again, all of this varies by bank. Not all banks have the same policies. Some banks only look at the credit history, income and job profile of the person.
There is literally no offline process nowadays. Everything is done online. An instant personal loan is deposited in the borrowers account without having to submit any physical documents. Only soft copies or Internet copies may be required. Personal information such as AADHAR card no, PAN Card and CIBIL score may be needed.
An existing customer has to upload all these documents along with the photograph online. There could be cases when a loan officer may visit the borrower’s place for physical verification. However, this is left to the discretion of the credit manager of the lending organization.
Always be on vigil to look out for offers. Interest rates on personal loans for employees of certain reputed organizations are lower.
Different loan values have varying loan rates. Also, different borrowers have different lending rates. Make a comparison of the lending rates and make an informed decision.
Applying to multiple banks and not taking a loan may dampen the CIBIL score. It is wiser to apply to only one bank at a time. When applying to multiple banks, and if the loan approval gets rejected, this event is recorded in the CIBIL report. It may lower the CIBIL score.
There could be discounts on interest levied based on loan repayment tenure. The lower the repayment tenure, the higher the discounts. It is always a good idea to take a personal loan with an average loan repayment tenure of 5 years.
What is reducing rate of interest?
If a person has availed Rs. 50,000 and has repaid Rs. 25,000, then interest is charged only on the unpaid part. The EMI is recalibrated to form interest and principal components for the unpaid part. The new EMI is automatically debited from the borrowers account by way of ECS.
Why are personal loans expensive?
Unsecured personal loans have high-interest rates. Personal loans should only be used as emergency funds with the intention of repaying the money within a period of not more than 5 years.