When you’re looking to borrow money quickly, a lot depends on how you go about borrowing. Instant online loans are easy to apply for via your phone, whereas traditional loans will generally require a trip to the branch, paperwork and can take longer.
Deciding between the two will depend on how quickly you need it, what you can afford to repay and how you want to go about it. We’ve made it easy below.
What Is ‘Instant’?
Although it can be a bit of a general term, here is a breakdown of what it really means.
-
Fast approval:
An online instant loan can be approved very quickly – usually within minutes. However, your money will not reach your account until they have verified your details with their partners. This can take from under an hour to a day.
-
Still require eligibility:
As with any loan, lenders will usually want to know your income, credit rating and age.
-
Varied offers:
Depending on who you are applying with, the loan amount, interest rate and duration will vary. Any offers shown are just a guide.
How Do They Differ?
This is usually where you will see differences.
-
Online or in person:
Applying for an online loan is done via a personal loan app or website, meaning you can apply at any time of the day. Whereas traditional loans are usually completed during office hours by visiting your branch.
-
Paperwork:
Many banks will require you to print and sign documentation. However, many online lenders verify your identity and income. No paperwork is required.
-
Track your application:
You can usually track your application online. Whereas visiting a branch may require you to call or visit again.
How Do They Compare?
They may not always be cheaper. Consider the following factors when deciding whether to apply for an instant money loan or through your bank.
-
How quickly:
Traditional loans can take several days and sometimes even weeks to approve and pay out. Whereas digital lenders can make a decision in minutes. If you need your money quickly, this could be the option for you, such as for medical costs or unexpected repairs.
-
Costs:
Unsecured loans can be more expensive than secured bank loans. The interest rate will also depend on your credit profile. Whatever option you choose, it is important to check the interest rate, processing fee and any fees for foreclosure.
-
Amount and duration:
Banks may offer larger amounts of money and longer repayment periods, especially if you offer something as security. Digital lenders tend to offer more flexible repayment periods. Some offer between 6-60 months. The longer the duration, the less you will pay per month (EMI), but the more interest you will pay overall.
-
Example:
If you take out a loan of ₹1,00,000 for 12 months at 18% annually, then you would pay approximately ₹9,168 per month. Overall, you would pay back ₹1,10,016. Always consider how much you are paying overall.
Which Option Is Best For You?
Most people will consider how quickly they need the money, how much they need and how much paperwork they are happy to complete.
-
Quick:
If you need to get instant cash loans quickly and are happy to verify online, then a digital lender will often be the best option. This is why searches for online instant loan in India increase during festivals, holidays and unexpected repairs.
-
Plan ahead:
If you need a larger amount of money or are already in a good position with your bank, then you may get a better rate by waiting for your bank to make a decision.
-
Check they are regulated:
Ensure they are regulated or partnered with a lender. Be cautious of anyone asking for money upfront. Use an loan EMI calculator to ensure you are happy with the amounts and durations. The EMIs should fit well within your monthly budget.
Conclusion
Both options can work for you. Traditional loans are best for planned larger borrowing, whereas digital lenders, such as instant money loan are best for when you need the money quickly and don’t want too much paperwork.
If you need something that fits your plans, then the Prefr personal loan app is perfect. You can check your eligibility in minutes, get instant approval and receive your money in around 30 minutes. Most applications will be processed within this time; however, it can take up to 24 hours depending on the lender. Loans can be taken out for between 6-60 months, and interest rates range from 18-30%. No paperwork is required to apply. You should be aged between 21-55, earn a minimum of ₹15,000 a month and have a credit score of 650+. Find out more on the Prefr home page now.