Personal loans have become a popular financing option for individuals seeking immediate financial assistance. Among these, instant personal loans seem to be potentially rising due to their quick approval process and minimal documentation. While both types of loans serve the same purpose, they differ in terms of processing time, eligibility criteria, and other factors. This article explores the key differences between personal loans and instant personal loans to help you choose the right option.
What is a Personal Loan?
A personal loan is an unsecured loan provided by banks and non-banking financial companies (NBFCs) based on the borrower’s creditworthiness, income, and repayment ability. Unlike secured loans, online personal loan do not require collateral, making them a convenient borrowing option for various purposes such as medical emergencies, home renovation, education, or travel expenses.
Features of Personal Loans
The following are the features of a personal loan.
- Loan Amount: The loan amount may vary depending on the borrower’s income and credit profile.
- Tenure: Personal loan tenure ranges from 1 to 7 years, allowing flexible repayment options.
- Approval Time: Personal loans usually take a few days for approval and disbursal.
- Interest Rates: The interest rates on personal loans depend on the borrower’s credit score and the lender’s policy.
- Documentation: For documentation personal loans require income proof, identity proof, address proof, and bank statements.
- Processing Time: Loan approval may take anywhere from a few hours to several days, depending on the lender’s verification process.
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What is an Instant Personal Loan?
An instant personal loan offers instant cash, without requiring any asset as collateral. It can be used for many purposes, such as repaying hospital bills, wedding expenses, home renovation, and many more. Most importantly, instant personal loans have quick processing of approvals and disbursement. Usually, there are no delays during emergencies.
Features of Instant Personal Loans
The following are the features of instant personal loans.
- Loan Amount: The loan amount is usually lower than traditional personal loans.
- Tenure: Shorter repayment periods, typically between 3 months to 3 years.
- Approval Time: Instant approval and disbursal, often within minutes or a few hours.
- Interest Rates: Slightly higher interest rates due to the quick processing.
- Documentation: Requires minimal documents, often just a PAN card, Aadhaar card, and bank statements.
- Processing Time: Instant loans are processed digitally, making them a potentially faster alternative to traditional personal loans.
Key Differences Between Personal Loans and Instant Personal Loans
The following are the key differences between personal loans and instant personal loans.
| Features | Instant Personal Loan | Personal Loan |
| Loan Period | The loan period is short and usually ranges from a few days to a few months. | The loan period is longer typically 12 to 60 months. |
| Documentation | Minimal documentation is needed. | Requires income proof, address proof, and identity proof. |
| Application Process | The application process is 100% digital and paperless, completed in minutes. | The application process can be both online and offline. |
| Approval Time | The approval can be instant or completed typically within a few hours. | The approval time for a personal loan can take a few days. |
| Loan Disbursement | the funds are disbursed instantly to the borrower’s account. | The funds are disbursed within a few days, depending on the lender. |
| Eligibility Criteria | The eligibility criteria are flexible, even for low credit scores. | Requires a good credit score and stable income. |
Which One Should You Choose?
Your financial situation and urgency determine whether you should choose a personal loan or an instant personal loan. If you need a large loan for home renovation, education, or business expansion, a personal loan can be a suitable option. It comes with lower interest rates and a longer repayment period, making it appropriate for people with a high credit score and stable income. However, approval and disbursal may take a few days.
If you need capital quickly for medical emergencies, travel, or smaller expenses, an instant personal loan is more convenient. With the help of an instant personal loan app, you can get quick approval with minimal paperwork. These loans can be a suitable option for those with a low credit score who may not qualify for traditional personal loans. However, they usually come with higher interest rates due to the quick processing time.
Conclusion
Both personal loans and instant personal loans help with financial needs, but they serve different purposes. Personal loans are suitable for those who need a large amount, lower interest rates, and a longer repayment period. Instant personal loans, however, tend to be suitable for those who need capital fast with minimal paperwork. Knowing the differences and evaluating your financial needs can help you make the right choice. Choose wisely to ensure a smooth borrowing experience that fits your financial goals.
