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Do instant personal loan apps really worth a try?

instant personal loan apps

What are instant personal loan apps?

Instant personal loan apps are a great way to refill your wallet anytime when you need instant cash. Have you ever run out of money in the middle of the month or you needed a particular amount of money that you can’t even take a loan or there is no time for a loan. A time comes when you needed the money most but have nowhere to go. At the time of need, even your relatives or close friends also don’t help because it is not necessary that they have that much amount that you need or maybe they have trust issues. In this busy and inflationary world, people look at their own needs first before helping anyone else. Many a time people lose some opportunities, some important stuff or may suffer from some medical issues but don’t have money to deal with it. Nowadays, social media sites are really overflowing with the ads of instant personal loan apps. Ads that guarantee an instant amount, whether it is a medium or large amount directly transferred to your bank account.

So isn’t it mesmerizing that at your most vulnerable time you can get a small help of a loan from these instant personal loan apps? Personal loans are financial tools for emergency needs, and they are unsecured loans, which means you don’t have to submit any collateral and can easily get through online instant personal loan apps.

The advantages of instant personal loan apps over bank loans

  • No collateral: You don’t have any need for submitting any collateral
  • High disbursal amount: A large amount of loan can be taken
  • Less paperwork: Minimal documentation is required
  • No restrictions on how to spend: you can spend the money whenever, wherever and however you want
  • Easy and quick: Online apps and websites are available, and the loan is sanctioned in a few simple steps
  • Low-interest rate: Rate of interest is less than the banks

The amount which is assured by them is enough to fulfil your instant financial needs such as dept. Consolidation, health-related, and personal expenses. The instant personal loan is provided by online procedure. Therefore it is easy to use and also less time taking. These applications seem easy to operate, but in order to get a loan, your past records should be very clear you should have the CIBIL SCORE of 780. Also, you should have a regular source of income, whether salaried or self-employed business.

These instant personal loan apps after being paid in your account give you a very short span of time for small amounts like 4k – 5k they provide only one month and for the considerably large amount like 3L – 4L these applications provide time span of 1 – 5 years. According to the time span given to users there APR (Annual Percentage Rate) can vary from 11% to 35%, this APR of the users also depends on the file of the individual applicant and the lender. The entire amount is paid back in instalments in the given fixed time provided by the app.

To apply for such personal loans you have to:

  • Choose the best, safe, secure, and reliable personal loan application by comparing different apps and then fill in your personal, employment, and financial details to check the eligibility of your loan approval.
  • Select the loan amount and tenure that you require.
  • Submit the required KYC documents for approval.
  • Receive the money in your bank account.

A personal loan is a great way to build your credit score or portfolio within a short period of time, which also leads to an increase in the credit limit. Personal loans are very flexible in nature, as it has no restrictions to spend. Also, you have a number of lenders available from which you can choose according to your trust or flexibility. Also, regular payment of EMI will increase your credit score, which may benefit you for a high disbursal amount or a low-interest rate or increased chances of being granted for further loans. Although these personal loans don’t benefit you in a tax deduction for some cases, with proper receipt may help you in IT deductions.

As everything in the world has pros, then it also has some cons. In case of personal loans if you miss any of your EMI or unable to make the future payments, firstly the lender will try to recover the amount through its recovery agents, but it will also affect your credit report as your account will be marked as default. Hence, your further loan approvals will be affected. A negative impact on your CIBIL score is nothing less than a black spot on your credit history.

Late repayment of a loan or a missed EMI can lead you to non-approval of loan from any lender or bank. Choose and select wisely the amount and the tenure of repayment according to your financial conditions. One more factor that affects your loan approval is the number of active loans. Before sanctioning a loan, lenders check the number of active loans or debt you currently have. If you already have a number of loans such as home loan, car loan or education loan, then you should avoid taking a personal loan, or it may decrease the chances of your loan approval as it reflects your creditworthiness.

Some of the instant personal loan apps allow you to prepay the loan amount according to your convenience, but some of them do not allow. Also, there may be some additional fee called prepayment/foreclosure charge/penalty which can range from 1%-2% of the principal amount remaining or may also vary from lender to lender.

There are several ways to repay the loan, such as Prepayment, Part payment, and Preclosure:

  • Prepayment: When you repay the loan amount before the due date, and the amount may or may not be equal to the total due loan amount.
  • Part Payment: When you repay the amount less than the total due amount before the due date.
  • Preclosure: When you pay off the total due amount before the tenure has ended. It also has some charges ranging from 2-5% varying from lender to lender.

There are some important factors that one should consider before taking a personal loan:

  • Penalties, Prepayment charges, processing fees should also be considered before taking any loan.
  • Interest rates in another factor which should be concerned before taking a loan.
  • Check the EMI, whether you can afford it or not.
  • A number of active loans as a new loan can become a burden to you.
  • Repayment period should also be considered that whether you will be able to repay on time.

How to avoid loan rejection when applying from instant personal loan apps?

  • Ensure that you have an adequate amount of bank balance as before sanctioning the loan, the lender checks your bank balance that whether you’ll be able to repay the amount or not. If you don’t have sufficient bank balance, then the lender may reject your loan application.
  • Keep your credit history clean. While checking the eligibility of your loan application, the lender will check your past credit history. If any EMI is missed or was late, then the loan may get rejected. So ensure timely payment of your previous loans or credit card payments.
  • Keep your documents properly updated and ready for eligibility check.
  • Lenders prefer to sanction the loan to the people who are stable at their jobs. So avoid frequent job switches as it reflects that you are unstable, which may give a negative impact.

What happens if a Personal loan is not paid?

People before taking a personal loan have a question that if they’ll not be able to repay the loan on time, then what will happen? Will they have to go straight away to jail? Will there be any criminal charges on them?
To answer all these questions, the person not able to repay the loan will not suffer any criminal charges as defaulting on a loan is a civil dispute.

There are different types of loan defaulters:

Careless/Over-smart defaulters are the people who unnecessary take a large amount of loan and then are not able to repay on time or over-smart people who try to game the bank or the lender by giving fake excuses. These type of people may put to jail.
Genuine people are the people who have some genuine problems such as financial breakdown, medical issue, accidents, etc. due to which they are not able to repay the loan. For these people, the court may lower the interest or may increase the tenure of repayment.
So before taking any personal loan do consider all the factors as Personal loan has pros and cons too. It is an effective way of getting money in an emergency but at certain conditions. Hence, think before applying.

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