13 February, 2025 | 11:00 IST
Emergency loans refer to credit facilities where you can borrow money almost instantly to meet unexpected expenses. These are short-term borrowing, generally spanning over a few months to a maximum of 5 years, to meet emergencies.
Also known as instant loans, these personal loans could be helpful to meet financial needs in cases of medical emergencies, vehicle repair, home renovation, or any unplanned spending.
Emergency loans have gained traction with the expansion of digital lending platforms in recent years. You can even avail a loan within minutes. Most of the lenders offer online personal loans based on two major factors- income and credit score. So, it is important to maintain a healthy credit profit and to have a stable income to get quick approval for a personal loan.
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1. Indian national – You must be an Indian citizen
2. Age – 21 to 60 years of age
3. Employed - You must be a salaried employee or a self-employed person with a steady income
4. Credit score should be 700 or higher
5. Minimum income should be Rs 15,000 per month
ALSO READ: Fast Emergency Loan: Tips to get instant loan approval
1. KYC documents
2. Pan Card
3. Aadhar card
4. 3-months’ salary slip
5. Employee ID card
6. Bank statements of the last 3 months
Moneycontrol has teamed up with seven lenders to give you access to 100% digital instant loans of up to Rs 50 lakhs. You can get the loan in just three steps — enter details, complete the KYC process and set up EMI tenure. The interest rates start at as low as 10.5% per annum.
A credit check is when a financial or lending institution checks a person’s credit history, credit report and credit score. This is done to assess whether an individual is qualified to take on a loan and their creditworthiness.
In India, the credit score issued by Transunion CIBIL is popular. It ranges from 300 to 900, with a higher score indicating better creditworthiness and a lower risk to lenders. A score of 750 and above is considered excellent, increasing the likelihood of loan approval and favourable terms. A lower score, below 600, may result in loan rejections or higher interest rates.
There are two main types of credit checks:
Hard Credit Check
A hard inquiry or check occurs when you apply for a loan or credit card. Lenders pull your credit report to evaluate your ability to repay the loan. A hard credit check may slightly lower your credit score temporarily, but it’s necessary for loan approval.
Soft Credit Check
A soft inquiry occurs when you or a third party (like a potential employer or a lender offering pre-approved credit) checks your credit report for informational purposes. This does not affect your credit score. Soft checks are often used for background checks or to pre-qualify someone for an offer.
In order to be eligible for an emergency loan, in addition to the above, an individual must have a clean borrowing and credit history.
1. Have a good credit score
Check your CIBIL score. If your score is low, take appropriate steps like reducing your debt, rectifying errors, reducing credit utilisation ratio and others.
2. Have a stable employment
Provide salary slips of the past 3 months to prove you have been employed for a reasonable period of time.
3. Avoid frequent loan applications
Try not to apply for loans or credit cards before applying for an emergency loan.
4. Offer collateral (if required)
If you have a low credit score or a thin credit history, offering collateral can improve your chances of loan approval. Secured loans are less risky for lenders.
5. Consider lenders who offer loans based on other criteria
Some lenders may offer emergency loans based on your income level or relationship with the bank, even if your credit score is not optimal.
ALSO READ: Emergency Loan: Here’s how to choose most suitable loan
Understanding and managing your credit health is essential when applying for any type of loan, including emergency loans. By staying informed about your credit score, making timely payments, and maintaining a responsible financial profile, you can improve your chances of loan approval when you need it most. Whether you're facing an urgent financial need or planning for the future, taking proactive steps today can help secure your financial well-being in the future. Stay mindful of your credit habits, and always choose lenders and loan terms that align with your financial situation.
Moneycontrol has teamed up with eight lenders to offer 100% digital personal loans up to Rs 50 Lakhs. The interest rates start at as low as 10.5% per annum and you can complete the application in a few simple steps.
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