Traditional personal loans vs. instant loans some points of differentiation

1. Traditional personal loans vs. instant loans: some points of differentiation. Traditional personal loans are extremely popular amongst Indian borrowers. However, there’s a new type of personal loan that is taking the market by storm – the instant cash loan. The demand for this type of personal loan is spreading like wildfire. If you haven’t heard of such loan, the following article will give you a fair idea about them by telling you how they differ from normal personal loans. 1. Loan amounts. One of the main points of difference between a normal personal loan and an instant cash loan is the amount of financing on offer. With traditional personal finance, you can get up to Rs. 50 lakhs with some lenders. This is a lot in comparison to instant cash loans that will provide a maximum of 2 lakhs; some lenders might provide a few lakhs more but nowhere next to the upper limit of a personal loan. However, unlike personal loans that have a lower limit of around 40K-50K, instant cash loans usually start at Rs. 2,000! This makes them a viable option for small to medium financial needs, for which borrowing a personal loan would be a little over the top. 2. Eligibility. Being eligible for a personal loan is no joke. You’ll need to have a minimum salary of above Rs. 25,000. You will also need to have a respectable credit rating of above 700. Fall short in any of these two factors and being eligible for traditional personal finance seems like a longshot. The scenario is a little different with an instant cash loan – you can apply for these with a min. income of just 18K & without having a credit rating at all. This makes eligibility a breeze! 3. Tenures. Tenures are proportionate to the loan amounts. Since traditional personal loans have higher loan amounts, they come with longer tenures to comfortably repay the loan. In this regard, most lenders will provide you tenures ranging from 3 months to 12 months. This is more than enough keeping in mind the ticket size of the loans on offer. 4. Documentation. This is another area of difference. Where traditional personal loans will require numerous documents, most instant loans will require just 4 documents & a selfie taken from your phone. This is mostly because instant loans these days are made available through apps which have & store your information (securely & privately of course). 5. Prepayment charges.

2. Unlike personal loans, instant loans usually do not levy prepayment charges on their loans. This allows you to cut short the tenure of the loan and reduce the interest you pay without worrying dishing out any prepayment penalties. It’s truly amazing and extremely helpful! Interest rates: Personal loan interest rates usually range between 10.99% & 25%. Instant loans on the other hand are provided to you at rates ranging from 1.25% to 2.50% or more per month. So for shorter tenures, instant loans are much more affordable. Albeit both loans have their places & uses, if you ever need smaller loan amounts, it makes sense to opt for instant loans instead of borrowing from friends & family. We hope this article has given you a clear understanding of instant loans and how they differ from usual personal loans. Good luck and all the best!