Instant loan apps: All you need to know about how they work
20 November, 2024 | 13:15 IST
Personal loans could be helpful in meeting financial needs for several purposes like medical emergencies, house repair, paying fees or a big-ticket purchase. With rapid advancements in technology, the process of availing a loan has become fast and simple. Borrowers can easily avail loans using instant loan apps.
Banks and Non-Banking Finance Companies (NBFCs) generally launch their own apps for availing instant loans. Additionally, there are also digital platforms like Moneycontrol that partner with lenders to offer online loan options. These loan apps offer users the convenience of applying for loans anytime and anywhere.
Conventionally the process of availing a loan, involved multiple visits to a bank or NBFC’s physical office to gain information about the loan to apply for the loan. Instant loan apps simplify this process as you not only get to know everything about the loans but can also apply for an online loan. Instant loan apps also help you in tracking the status of your loan application. Additionally, after the loan is approved, you will be able to view the details as well.
While the process of getting an instant loan differs from app to app, however the process is usually simple and straightforward. Here’s a look at the steps you need to follow to get started:
You should download and install the app.
Next you will need to create an account.
Now you will need to enter details such as your name, email address, age, and contact details. A few other apps may have additional verification steps, like an OTP.
You should complete your application by entering all the information such as your personal and financial background in the application form.
You will also need to upload all your documents to the app, such as identity proof, address proof, bank statements, income proof and other such details
Review your application form to ensure the details provided are correct and then submit.
After completing these steps, the lender will process your application. If the loan is approved you will be sent a loan offer with details such as interest rate, loan amount and repayment terms. Once the document is accepted, the loan amount will be disbursed to your bank account.
You can check multiple loan offers on digital lending platforms like Moneycontrol app. In a 100% paperless process, the app helps you to apply for instant loans for up to Rs 15 lakhs from its lending partners.
Factors likely to affect your instant loan application
While there is no specific way of having your loan application approved, taking care of some factors can increase the chances of your application’s acceptance. Here’s a look at some of the key factors which can affect your instant loan application:
Credit ScoreHaving a high credit score increases the chances of your loan application’s approval. A high credit score is a mark of your ‘creditworthiness’ or ability to repay the loan. Banks and NBFCs generally prefer borrowers with a positive credit history.
Income LevelThe amount of money you can avail as a loan depends on your income level. Private and public sector lenders alike assess the loan applicant’s income to find out the loan amount eligibility.
Low Debt-to-income RatioA low debt-to-income ratio is generally preferred by lenders. A debt to income ratio compares the amount of money you earn and the amount you pay towards loans.
Employment historyGenerally, having a stable employment and a regular source of income can increase the chances of your loan approval. An applicant with a regular inflow of income is less likely to default on the loan borrowed by him or her.
Lender PoliciesDifferent lenders can have their own lending policies for determining the loan amount and borrower’s eligibility. Experts advise that it is essential to check the terms and conditions of the loan before applying.
Just like any other type of loan, borrowers need to repay the amount along with the interest charges. The loan interest rate may depend on your credit profile and loan amount. However, your interest outgo will be higher if you choose longer repayment tenure.
What are the Benefits of Instant Loan Apps?
Instant loan apps offer many benefits over traditional loans, here’s a look at some of them:
Easy access: Instant loan apps give users convenience and easy access as they can apply for a loan anytime, anywhere. This eliminates the need for physical bank visits.
Fast Approvals: The instant loan approval process is relatively faster than visiting a bank as the apps use technology to assess applications promptly. Often borrowers receive approval within minutes, making it an ideal option for urgent financial needs.
Instant Disbursement: Once your loan is disbursed funds are disbursed instantly or within a short timeframe. This ensures that you have timely access to the funds to meet your requirements.
Minimal Documentation: Instant loan apps generally need less documentation compared to traditional banks and NBFCs. Many apps use the Know-Your Customer (KYC) verification process to get your details in order to reduce the hassle of paperwork.
Easy to use: Instant loan apps are designed in such a way that they do not alienate any users. These apps are designed to be user-friendly and easier to navigate making the application and repayment process simple.
Instant loan apps have multiple benefits ranging from quick approvals to instant disbursement. These apps help borrowers in availing loans easily when they are required to. However financial experts suggest that borrowers should carefully assess their finances and their ability to repay loans before availing them.
Summary
Instant loan apps offer a quick and convenient way to access funds. With these apps you don't need any bank visits or paperwork. Easy application process, fast approvals, and instant disbursements are some of the top benefits of these apps.
Disclaimer
This piece/article was written by an external partner and does not reflect the work of Moneycontrol's editorial team. It may include references to products and services offered by Moneycontrol.
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