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Do you know what is instant loan? Discover the features, eligibility criteria, fees, etc., and get fast access to funds with this short-term borrowing option.
Suppose you have made all your plans for the month; everything is set, but suddenly, an unexpected medical bill pops up out of nowhere.
The clock is ticking, your salary is still a few days away, and you are stuck without a quick fix. What do you do next? Instant loans can help you in this situation!
Instant loans are a fast and convenient way to access funds when you need them the most. These loans are designed to provide quick financial relief, allowing borrowers to receive money in their bank account in a matter of hours, often with fewer formalities.
To learn more about what is instant loan and other key aspects, go through this blog.
What Is Instant Loan?
An instant loan is a type of credit that allows you to avail funds within a short period with minimal procedures.
It helps you to quickly access money for urgent needs like medical emergencies, weddings, education, or even funding a vacation.
You can avail of this type of loan at competitive interest rates.
What Is the Nature of Instant Loans?
Now that you know what is instant loan, let us find out about its features. Here are some crucial features of instant loans that explain their nature:
Unsecured Loan
Most instant personal loans are unsecured, so you do not need to pledge assets like your house or car as collateral. This makes the loan process faster and simpler for borrowers.
Short Term
Instant loans are typically short-term loans, meaning you are expected to repay them quickly, often within a few weeks or months.
This makes them ideal for meeting short-term financial needs but requires timely repayment.
High-risk Borrowing Option
Since these loans are sanctioned for a short term and are quickly processed, banks face a higher risk of default.
As a result, they charge higher interest rates compared to other loan options.
Who Issues Instant Loans?
Instant loans are typically issued by a variety of lenders, including:
- Banks
- Non-Banking Financial Companies (NBFCs)
- Peer-to-Peer lending platforms
What Are the Eligibility Criteria to Avail Instant Loans?
Before availing an instant loan, here are some eligibility criteria you must be aware of:
Credit Score
To secure an instant loan at a lower interest rate, you should maintain a credit score of 750 or higher. A good credit score helps you access loans at more affordable rates.
Age of the Applicant
Most lenders require you to be at least 18 years old, while some prefer applicants aged 21 or above.
Occupation
Instant loans are available for both salaried and self-employed individuals, but it is important to check the lender’s eligibility criteria based on your job type.
What Are the Charges on Instant Loans?
While instant loans may seem like a quick solution, they come with a unique set of fees and charges that may surprise you. Here is a quick breakdown:
Processing Fees
Many lenders charge a processing fee when approving your loan. You must check this fee beforehand so you can make a well-informed decision about the total cost of borrowing.
Overdraft and Insufficient Funds Fees
If your bank account does not have enough funds for repayment, your lender might still try to debit the amount.
This could trigger overdraft fees from your bank and non-sufficient funds penalties from the lender.
Penalty for Missed Payments
What happens if you miss a payment or forget to request an extension? You might end up with extra penalties until your account has enough funds to clear the full loan amount.
What Is the Repayment Period for Instant Loans?
Instant loans typically have short repayment periods, which can be tough if you are already struggling financially. Most borrowers end up extending their loan, adding more fees each time.
For example, if a lender charges ₹4,000 for each extension and you renew the loan twice, your total loan could rise significantly in just one month.
What Are the Consequences of Instant Loan Default?
If you fail to repay your instant loan, it can lead to serious consequences.
Debt collectors may report the default to credit bureaus, which can severely damage your credit score and stay on your report for several years.
Additionally, if the lender takes legal action, your wages may be withheld to recover the owed amount.
The Bottom Line
Now that you know what is instant loan, you can make an informed decision when you need quick financial assistance.
While instant loans provide quick relief, they come with certain responsibilities, so always check the terms and conditions carefully.
Are you ready to get an instant loan? Get an instant loan at Jar today and manage your urgent financial needs effortlessly!
Frequently Asked Questions
1. What are the benefits of getting an instant loan with the Jar App?
The following are the benefits of getting an instant loan on Jar App:
- Instant Money Transfer: Funds are transferred directly to your bank account immediately after approval.
- Flexible EMIs: Choose from multiple EMI options ranging from 3 to 60 months.
- Safe & Secure: Your loan is processed securely, ensuring your data and funds are protected.
2. What is the minimum credit score required to get an instant loan?
To qualify for an instant loan at a lower interest rate, you should ideally have a credit score of 750 or higher. A better score helps you access loans at more favourable terms.
3. Do I need to submit physical documents to apply for an instant loan on Jar?
No, Jar offers a paperless application process. The entire loan application process is 100% digital, making it hassle-free and quick for you.
