The Best Personal Loan Tips Nobody Tells You About

Borrowing money online instantly is simple and hassle-free, but are you aware of all aspects of quick loans? This article sheds light on lesser-known instant loan facts in the following points.

#1 It’s not always necessary to take a personal loan.

This might seem surprising to you, but let us explain what we mean. If you have a requirement for money that does not qualify as an emergency, then it’s better to wait and save up to buy what you need instead of taking a loan. Whether it’s a personal loan or a home loan, it is still debt. If you are debt-free and would like to remain that way, then paying for an expensive purchase using your income is a better idea than getting into debt. However, if you face a sudden emergency that you absolutely don’t have the funds for, then taking a quick loan from your bank or a loan app is a good idea. You can become debt-free relatively early with an instant loan because its tenure is short. Most loan apps offer a maximum tenure of over a year, so when you borrow the loan you end up repaying it quite quickly, as opposed to a 15-year home loan.

#2 You can borrow money online instantly using a loan app instead of going to your bank.

Most people approach their banks hoping to get a quick loan, but banks are not known for speedy approval and disbursal. You might have a pre-approved loan waiting at your bank, but you must still submit to lengthy documentation and wait times till you receive the money. In contrast, leading loan apps offer the speediest approval and disbursal processes. Indeed, it might just take a maximum of 24 hours from the time you download the loan app and apply for the personal loan, and have it disbursed to your account. This helps immensely when you need the money in a hurry, and don’t have time to waste in chasing your bank for the loan.

#3 Some loan apps lower your interest rate if you’re a repeat customer.

Not many people are aware of this, but leading loan apps in the country incentivise repeat borrowing by offering lower rates of interest to second or third-time applicants. These incentives are offered under the app’s loyalty rewards programme. Banks in India do not offer lower interest rates to repeat customers – in fact, they might increase the interest rates for those with low credit scores and EMI defaulters. A lower interest rate saves money for you because you end up repaying less on the overall borrowing.

#4 The higher your credit score, the better for your application.

Your credit score is the foundation on which your application hinges – every lending institution proceeds to process your application after checking your CIBIL credit score. The credit score is of paramount importance because it defines your credit worthiness and tells the lender that you are a high or low risk applicant. The credit score may be lowered by past defaults and poor repayment history, apart from erratic income. However, a good credit score is bolstered by prompt repayments, history of early foreclosure and a consistently good repayment track record. The higher your credit score, the better your chances of getting a quick loan approval. If you get a loan rejection despite a high credit score, you can put it down to incorrect documentation or nature of your work (i.e. if you are not a salaried but a self-employed person).

#5 Quick loans have processing charges, too.

Just like secured loans, unsecured loans also have processing charges. The charges may be a flat fee or a percentage of the overall borrowing, whichever is higher. Please compare processing charges among like lenders before deciding on where to apply.

Conclusion

It helps to know all relevant details about the instant loan before you apply for it. This information helps you understand the loan product better and make an informed decision before borrowing it.

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