Instant Loans: Here's What You Need To Know

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Instant loans

Instant loans are those type of loans that are short-term, small-size credit facilities distributed through mobile apps.

Loan

Quick Disbursal

The quick disbursals that these loans offer are one of their best-publicised aspects.

Quick Disbursal

Range And Tenure

These loans typically range from Rs 1,000 to Rs 5 lakh, with tenures of 7-90 days. 

Interest Rates

The interest rates for instant loans are extremely high with around 30-36 per cent annualised. 

Rate of interest

Borrowing Cost

There are typically non-refundable processing fees, convenience fees, and late payment fees, which increase the effective borrowing cost of these loans. 

Borrowing

Short Payment Terms

These loans have short payment terms, so a borrower is generally supposed to pay the interest, fees, and principal in a short period of some days to a few weeks (12 months, in case of a large amount). 

Short Payment Terms

Impact on Credit Profiles

If one repays these loans on time, it can have a good impact on the credit history but if one is inconsistent, it can have long-term effects. 

Profile

Alternatives

Individuals can also go for safer options that include advances against employer advance schemes, regulated credit cards, or formal personal loans at lower costs with longer terms.

Alternatives

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