Taking a personal loan makes it easier to realise dreams and also fund emergencies. Are you about to apply for an instant loan for the first time? This article explains the most important factors you should know about the loan:
Your credit score and eligibility matter
Though the personal loan is one of the easiest to get, there are strict background checks in place to ascertain if you are a suitable candidate for the loan or not. The best loan apps are quite flexible in allowing those with low credit scores and relatively low salaries to apply for and get instant loans. However, the app checks your income and personal proof and approves the loan only if you have a good repayment history and are found suitable as a borrower. It is always better to have a good credit score before you apply for an instant loan. Apart from the credit score, you must also know your loan eligibility before you apply. The personal loan eligibility is decided based on your income, repayment history and credit score.
A loan app is an easier, faster option than traditional lenders
Though most people make a beeline for traditional lenders when they require a personal loan – especially if they are enticed with ‘pre-approved instant’ loans – it is always a more prudent choice to take the loan from a reputed loan app. The best loan apps in India offer flexible application processes, minimal documentation, quick approval, and good interest rates on loans. Moreover, the loan is repaid digitally instead of issuing cheques for the payment. The ease of application and disbursal and the fast processing speed make loan apps a more attractive funding solution than traditional lenders.
You can use the personal loan for any suitable purpose
The biggest benefit of taking the instant loan is that the money can be used for practically any purpose that seems suitable, whether personal or professional, emergent or not. You have the liberty to use the money to start a small home-based business, or pay your child’s semester fees, or fund a home remodel, or even buy the new iPhone. Instant loans are most preferred to buy expensive items where one does not wish to swipe their debit/credit card. However, we urge you not to take the loan to repay another person’s debt or pay for something expensive if you are unsure about repaying it as per schedule – this last may happen if you switch jobs or suffer a pay cut at work etc.
Personal loans help you build credit
This factor is important for those with a low credit score because of poor repayment history or never borrowed an institutional loan before. Borrowing a quick loan and repaying it within its term helps you build a good credit score. In turn, a good credit score enables you to borrow bigger loans (such as a home purchase or renovation loans) in the future.
The documents list is minimal
Another area where the instant loan scores over secured loans are in the documentation process. Instead of a long list of documents and tedious legal and residential/ office credential checks, the loan app does a quick but thorough check of the submitted documents, repayment history and credit score and sanctions the loan in a few hours. This is helpful for those who need the loan for an emergency and who do not have the time for a lengthy application and documentation processes.