Instant loans deliver just that, but beware of high interest rates.
Sarabjeet Kaur
Mar 23, 2016,
Updated Mar 28, 2016, 6:00 PM IST
Accessibility, speed is of the essence today. So banks too are getting on the speedwagon, claiming to offer instant loans within 10 seconds. Approval is given within a few minutes and money is then shortly credited to your account. But should one opt for such loans? What points should one keep in mind while going for instant loans?
Do instant loans really work that fast?
Yes, they do. A few banks have launched an app to download the process. Else, you just have to go to the bank website to get the loan disbursed to your account.
The rule is that you have to be an existing customer of that particular bank
Log in to your bank account via net or mobile banking, click on availability of the loans and it's all done
Note that there is eligibility criteria for even existing bank customers
Make sure you really need that money and have a clear repayment plan ready
Eligibility criteria
One should have a steady income to qualify for instant loans
An active savings account is a must
Your minimum age needs to be 18 years
You must be a resident of the country where you have applied for the loan
How does the approval process work?
Instant loans are available 24x7 on net banking. Apply via mobile phone as well.
Customer needs to fill in the name (as per IT records), date of birth and mobile number as registered with the bank
After clearing the eligibility criteria, it takes just 10 seconds for approval. May take 24 hours for the loan to get disbursed.
Things to keep in mind before opting for instant loans
Instant loans are mostly personal loans and come with an interest rate between 14 and 19 per cent, higher than home or auto loans
Not all of them have options to make part pre-payments. At times, pre-payments may actually attract heavy penalties, sometimes as high as 2-5% of principal outstanding
Make sure you repay loan EMI for entire duration
Instant loan schemes may be tempting to fulfil immediate financial requirements, but do check other options like loan against FD, against security etc, to save on interest outflow
Verify fine print regarding service charges or hidden charges before signing up
What about documentation process?
Instant loan is available only for existing customers as their KYC documents are already with the bank and hence no additional documentation is required
Primary difference between an instant loan and any others is the online paperless nature of it
Process is faster and involves lesser chances of fraud. So zero manual paperwork involved.
Instant loans normally do not require a credit check. Banks mainly focus on your ability to repay the amount.
Dos and don'ts of Instant loans
Instant loan approvals depend on your repayment capacity
Opt for instant loans only if there is high urgency or some emergency
Interest rates on instant loans are very high. So be careful before taking them because paying EMIs is not that easy.