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Planning to take a personal loan? Consider these factors and check if you can get instant loans to meet your financial needs efficiently in 2025.
Instant loans are a type of personal loan that banks and NBFCs (Non-Banking Financial Companies) provide with minimal documentation and no collateral.
These loans can help individuals meet their sudden financial emergencies, such as hospitalisation and others.
A good credit score usually enables you to get instant loans, which you can repay over a predetermined tenure to further boost your credit score.
What Are Instant Loans?
Instant loans are short-term loans that financial institutions provide without collateral within a short period.
These are usually pre-approved ranging between a few thousand to a few lakhs. You can apply for an instant loan to meet your medical bills, education expenses, debt consolidation, home renovations and other purposes.
Why Are Instant Loans Popular?
Instant loans offer pre-approved funding to customers. You do not need any collateral to apply for this loan.
A customer can get instant loans for multiple purposes without defining any specific purpose to the loan provider.
Besides, the easy application process and quick disbursal process make instant loans popular among customers. Instant loans help customers access funds immediately during financial emergencies.
Further, customers can choose between the loan amount (within the pre-approved limit) and loan tenure, ensuring flexibility. These features of instant loans are making it a demanded type of loan among borrowers.
Key Factors to Consider Before Taking an Instant Loan
Here are the key factors you need to consider before taking an instant loan:
1. Amount Needed
Before you take an instant loan, determine the amount you need. Based on pre-approved offers, you can get instant loans of higher amounts than you need.
However, taking the entire amount will increase your EMI (Equated Monthly Instalment) and interest amount.
2. Repayment Tenure
Banks and NBFCs offer different repayment tenure to their borrowers, ranging between a few months to a few years.
Ensure you choose a repayment tenure that helps you manage your finances after the EMI payment. The EMI amount depends on the loan amount, interest rate, and tenure of your instant loan.
3. Interest Rate and Hidden Charges
Instant loans often have a higher interest rate compared to traditional loans due to immediate access to funds with minimal documentation.
Ensure you compare the interest rate and features of your loan before applying. In addition, ensure you are aware of additional charges such as EMI late payment charges, foreclosure or EMI prepayment charges, and processing fees for your loan.
4. EMI Amount
The EMI amount depends on the loan amount, tenure, and interest rate. If you choose a longer tenure to repay your loan, your EMI will be lower compared to EMI for a short loan repayment period. You can choose an EMI option that aligns with your monthly income and expenses.
5. Credit Score
A credit score is a crucial factor that determines the possibility of loan sanction and disbursal. Lenders often consider the credit score while providing pre-approved instant loans.
Having a good credit score enhances your chances to get instant loans easily.
6. Credibility of the Lender
Ensure you check the credibility of your lender for transparent policies, transaction history availability, and fair lending practices.
You can check if the lender complies with regulatory standards, their reputation and testimonials for verification.
How to Choose the Right Instant Loan?
Choosing the right loan is crucial to align your financial needs and goals. Ensure you check the interest rate and processing fee on loans for effective financial planning and repayment.
Choosing an instant loan with a lower interest rate can help you with reduced EMI (equated monthly instalments) over the entire loan tenure.
In addition, verifying the data security and privacy set-up of the loan provider is essential to ensure financial security.
Opting for an instant loan with loan tenure flexibility can help you with convenient repayment options.
A fast disbursal turnaround time and proactive customer support team of the loan provider can further help you in financial emergencies.
Make sure to consider all the factors mentioned above while looking for the best instant loans for emergencies.
Common Mistakes to Avoid When Taking Instant Loans
Here are some of the common mistakes you should avoid when taking instant loans:
1. Not Checking the Terms and Conditions
To avoid challenges after loan disbursal and during the repayment period, check the terms and conditions of the loan and the financial institution.
It includes checking hidden charges on loans, foreclosure charges (if applicable), late payment penalties, and others.
2. Applying with Multiple Banks and NBFCs Simultaneously
More than one application with multiple banks and NBFCs affects your credit score as these financial institutions might reject your application based on credit hunger.
Additionally, if an application has been rejected by one financial institution, ensure you have a time gap before you apply for an instant loan with other institutions.
3. Not Preparing a Repayment Plan and Budget Reconsideration
Effective financial budgeting helps balance your income, expenses, and EMI payments while maintaining a steady cash flow.
You can consider budgeting with the 50:30:20 rule, wherein 50% of your income should be spent on your needs, 30% on wants, and 20% on savings and investments.
Paying EMI by 50% or cutting expenses can help you manage your finances effectively.
The Bottom Line
Pre-approved loan offerings by banks and NBFCs often help borrowers meet their financial needs in the time of emergencies.
However, checking the EMI, interest rate, tenure, disbursal time and credibility of the lender is crucial before taking such loans.
Ensure that you opt for the exact amount you need to balance your income, expenses, and EMI. Once you have done your due diligence, you can easily get instant loans with Jar!
