Bangalore, first published Aug 22, 2022, 4:32 PM IST
A instant loan may seem like the perfect remedy if you’re in a sticky situation. With no credit checks, no collateral, and fast approval times, this type of loan may seem like a quick fix to your short-term financial problems. However, before diving into the world of instant loans, you need to understand exactly what you are signing up for. We’ve outlined six important things you need to know before applying for an instant loan to help you make an informed decision.
Know your rights and responsibilities before taking out an instant loan
Before embarking on the instant loan application process, it is essential to know your rights and responsibilities. Some states have additional regulations that protect borrowers. When taking out an instant loan, it’s a good idea to make sure you understand the repayment terms, interest rate, and any fees that might apply. This information will be explained in the loan agreement, but reviewing it carefully before signing on the dotted line is a good idea. If you have any questions, clarify them with the lender.
The costs and fees associated with instant loans
When taking out an instant loan, it is essential to understand the costs and fees associated with the financing option. These costs and charges will be described in the contract, but it is important to review them carefully. Generally, lenders are required to break down applicable fees in a clear and concise manner. That being said, it is important to read the fine print. Fees and costs can vary from state to state, so you should make sure you know your state laws regarding financing options like these. When you take out an instant loan, you’ll likely have to pay a one-time fee, a fixed percentage of the amount you borrow. You will also be charged interest, which is calculated based on your loan amount and repayment terms. You should also know that some fees are mandatory, while others are optional. Make sure you know what you are responsible for paying.
How much can you borrow?
Another important thing to know when taking out an instant loan is the amount you can borrow. Although the exact amount you can borrow will depend on several factors, including your credit score, the interest rate on the loan, and the amount you are requesting to repay, most lenders, such as PaySense, limit instant loans at Rs.5 lakhs. Many lenders will also cap the amount you can borrow based on your income. Lenders can look at your income and expenses to determine how much you can borrow. For example, if you are in paid employment, lenders might look at your after-tax income. Low-income people may have a lower borrowing limit.
Check your options before applying for an instant loan
Before taking out an instant loan, it is important to check your other options. For example, you might have options like a credit card cash advance, a Personal loan, or a cash advance from your employer. These alternatives are often less expensive than an instant loan. Plus, you can use them to finance larger purchases like a car or a house.
Know your repayment options
Before you take out an instant loan, know your repayment options. You can repay the loan in one installment. However, most lenders allow you to make installments to repay the loan. They allow you to make weekly, bi-weekly or even monthly payments. Whether you choose to repay the loan all at once or make installments, be sure to keep track of your payments. It is important to repay the loan on time to avoid heavy penalties.
At the end of the line
Before you dive into the world of instant loans, it’s important to understand your rights and responsibilities, the costs and fees associated with instant loans, how much you can borrow, and how you will use the money. It is also important to check your options before applying for an instant personal loan.
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Last updated Aug 22, 2022 4:32 PM IST