Quick loans are getting popular as more borrowers are applying online to avoid the lengthy offline process. Usually, the urge is to get urgent funds for things that just can’t wait, like a medical bill, a college admission, or even buying that dream Macbook. But what most fail to realize is that urgency shouldn’t be the only reason to get a quick loan, as it comes with serious obligations of paying EMIs and sticking to a pre-decided repayment tenure. Sometimes, a quick loan can have a high overall borrowing cost as well.
This blog will help you understand:
- What are quick loans and how they work?
- The benefits and drawbacks, and
- When should you consider getting a quick loan
What Are Quick Loans?
Quick loans are essentially personal loan products designed exclusively for faster sanctioning, verification, approval, and disbursal. The entire process takes place online, and quick loans are mostly unsecured (i.e., borrowers are not required to pledge any asset as collateral). However, the term “quick loans” is indicative and doesn’t guarantee immediate approval and disbursal, as it takes time to assess borrower eligibility, check documents, and adhere to other internal lender policies.
How Do Quick Loans Work?
The entire process of a quick loan is digital and generally involves the following steps:
- Eligibility check: Reviewing the lender’s age, income, employment, and credit requirements
- Online application: Borrowers need to submit accurate personal, employment, and financial information.
- Verification: KYC and other details like employment and income are verified.
- Credit assessment: The lender reviews the borrower’s repayment history, existing liabilities,, and repayment capacity.
- Approval: The borrower receives an offer containing the loan amount, APR, EMI, tenure, and applicable charges.
- Disbursal: Once the borrower accepts the offer and final verification is done, the approved amount is disbursed.
It’s good to know: According to the established guidelines of the RBI, all quick loan providers are required to share APR and applicable charges with customers through a Key Facts Statement before the customer accepts the offer.
Key Advantages of Quick Loans
There’s more than one reason why people go for quick loans today.
- Fast Approval: Digital processing saves time from physically visiting a branch or heavy paperwork
- Minimal Documentation: A few basic KYC (like PAN and Aadhar) and income-related details (like employment proof and salary slips/bank statements) are required to get a quick loan approved.
- Useful During Emergencies: Quick loans can help save the day during an unforeseen crisis, like a sudden hospitalization or any unexpected education expenses, like college admissions on deadline.
- Flexible Loan Amounts: You can avail a digital personal loan for different amounts and tenures.
Disadvantages of Quick Loans
Like every other financial product, quick loans too have their fair share of disadvantages, like
- High Interest: Being unsecured loans, quick loans comes at a higher interest compared to traditional loans backed by collateral
- Short Repayment Period: Quick loans generally have shorter repayment tenure, which in turn leads to higher monthly EMIs. For some, the repayment schedule can disrupt existing financial commitments.
- Borrowing Beyond Need: While quick loans can be convenient, access to high credit often attracts impulsive borrowing. So, no matter what the lender offers, never borrow more than your need.
- Heavy Impact on Late Payments: Any late or missed EMI payments for quick loans often attract penal charges and negatively impact your credit profile.
When Should You Consider a Quick Loan?
For most people, a quick loan can be a convenient option if:
- There’s a medical emergency, especially the ones not fully covered by insurance
- An essential home renovation or vehicle repair
- Urgent education expenses
- A planned wedding
- Unexpected bills that can’t be deferred.
When Should You Avoid Quick Loans?
Ideally, you should never take a quick loan for impulsive shopping, buying expensive gadgets, or spending on luxury products and unplanned holidays. Additionally, avoid a quick loan if you already have a huge functional burden and unstable regular income
Tips for Responsible Borrowing
Ending up with extra debt from a quick loan is never a good idea. To keep it safe, follow the tips below:
- Always compare lenders for the APR, EMI, processing fee, tenure, total repayment amount, and penal charges.
- Read the Key Facts Statement and loan agreement carefully before accepting the loan.
- Check whether any amount will be deducted from the sanctioned loan before disbursal.
- Avoid taking multiple loans at one go.
- Set up monthly payment reminders or auto-debit and maintain sufficient balance.
Also Read : 7 Mistakes to avoid when taking an instant personal loan
Why Choose Ram Fincorp?
Ram Fincorp makes borrowing simple with a fast, secure, and fully digital loan application process designed to help you access funds with ease.
- Quick Digital Loans: Apply online and get fast loan processing for eligible applications.
- Minimal Documentation: Complete your application with fewer paperwork requirements.
- Fast Online Verification: Enjoy a seamless digital verification process for quicker approvals.
- Quick Disbursal: Eligible borrowers receive funds promptly after loan approval.
- Trusted Lending Service Provider: Ram Fincorp is a sub-brand of Kundanmal Technology Private Limited, committed to providing a smooth borrowing experience.
- RBI-Registered Lending Partner: All loan applications are approved and funded by R.K. Bansal Finance Private Limited, an RBI-registered NBFC.
- Transparent Loan Process: Loan approval, amount, interest rate, tenure, and disbursal are subject to eligibility, documentation, and the lender’s internal credit assessment policies.
FAQs:
Are quick loans and payday loans the same?
Not really! A quick loan is a broad term for a credit facility mainly offered through digital channels. On the other hand, a payday loan is a dedicated short-term loan product with a high principal and EMIs and a pre-set agreement (usually 30 days) that instructs the borrower to repay the entire amount by the next payday (hence the name payday loan).
How fast can a quick loan be disbursed?
Although it’s called “quick loans,” the term is indicative and doesn’t guarantee instant approval, as it calls for fulfilling pre-set eligibility criteria, KYC, documentation, and internal credit assessment. However, if you have no financial obligations and a healthy credit score with solid income proof, you can expect your quick loan application to be processed within 7-15 days.
Can I apply for a quick loan with a low credit score?
Yes, you can apply for a quick loan with a low credit score. However, the lender has sole discretion over the final approval. Generally, a low credit score lessens your chances of loan approval. In case your application is approved, you might be approved a lesser amount than you need at a higher interest.
What should I compare before choosing a quick loan?
Before taking a quick loan, you are suggested to compare the APR, sanctioned amount, net disbursal, EMI, tenure, processing fee, total repayment, penal charges, and foreclosure conditions across multiple lenders.
Is a quick loan suitable for travel or wedding expenses?
Quick loans are essentially designed for emergency needs. So, it’s not recommended to take a quick loan for any unplanned travel or wedding expenses, unless it remains within a defined budget.
