It’s no surprise that people now access a wide variety of financial products that did not even exist a decade back. The availability of financial technology or fintech as it is known popularly has made this radical change possible.
Instant gratification is now part of this digital revolution that everyone is seemingly a part of. Everybody enjoys the fruits of technology and the ease-of-access that comes with it. So, the financial services sector has also extended the option for borrowers to tap into credit anytime in the form of instant loans. Designed to meet the demands of people and backed with powerful tech, instant loans are helping people access credit easily and on demand.
What Is An Instant Loan?
Traditionally, the loan application process was tedious, cumbersome and involved a lot of paperwork. It would take days and the applicants would nervously wait for the outcome. Now armed with technology financial institutions process loans in real-time.
The process of applying for such instant loans is simple. You can submit your documents online and get approval within a day. You don’t need collateral or guarantors. All you need is a smartphone, internet, and KYC documents.
Read More: How Taking A Loan Can Push Your Startup Forward?
Why Are Instant Loans Gaining Such Popularity Among Youngsters?
The youth of this generation always prefer online to offline. The next time you go visit your bank, take a look at the people who are there. You will hardly find any of our youth queuing up to deposit cheques or cash or waiting to get their loan approved.
Does that mean they are not seeking loans?Absolutely not. They are doing it from the comfort of their homes and work places using their smartphones. People do not want the hassles involved in availing a loan. Opting for an instant loan online is easier, efficient and convenient.
In fact, when it comes to unsecured loans like these, CRISIL has reported that this segment has grown 4x between 2015 and 2018. This means it is a popular product and technology has played a key role in making this possible.
Benefits of Instant Loans
Availing instant loans during certain tricky situations can help you tide over a difficult period or help you meet your aspirations. Let’s take a look at why instant loans are gaining popularity nowadays.
1. Simple Process:
The application process is super easy when it comes to instant loans. All you need to do in most cases is download an app on your phone or apply online. The entire loan application process takes a few minutes and the outcome is informed instantaneously. NIRA, a modern fintech lender provides instant loan to salaried professionals with an application process which takes under 3 minutes and provides instant approval.
2. No Collateral:
You might think banks require no collateral for a personal loan but have you ever given it a thought that they are approving a personal loan based on your savings’ account with them. Instant loans do not require any form of collateral from you, making it easier for you to get approval as well.
3. Build Your Credit:
Instant loans, just like any other type of loan affects your credit score. If you repay your loan back on time you will most definitely be ending up with a good credit score. This helps you to secure more loans in the future. In fact,this has become a popular choice for young people who have no CIBIL score and are first time borrowers. At times it may be hard for first-time borrowers to secure a loan so instant loans make everything easier for them.
4. Instant Approval and Disbursement:
Contrary to what traditional banking offers you, in case of instant loans you get approval instantaneously and disbursements within a day. Since you have already provided your documents, it does not take long for fintech companies to establish your identity using the technology they have at their disposal. With a simple and fast approval process comes the benefits of easy disbursement of loans and simple repayment options.
5. Use Less, Pay Less:
Often times, people end up paying money for a loan that they did not use completely. This is quite unfair, but there is no need to worry about that anymore. Even if you do qualify for a large sum and end up using half of it,you can pay interest only on the amount you have used.
Drawbacks of Instant Loans
There is no denying the fact that instant loans are extremely convenient. But there are certain points you should keep in mind..
1. Higher-Interest Rates:
Interest rates for unsecured instant loans are higher than other secured loans like home loans, education loans, and others. Consider it a price you are paying for the convenience and lack of collateral. But regardless, the factre mains that you must ensure that you will be able to afford the EMIs.
2. Exercise Caution:
It’s not very hard to fall into a debt trap. When you are taking an instant loan, chances are you are strapped for cash. In such a scenario, taking a loan might help you out in the short run. Make sure that you don’t fall into a debt-cycle where you are taking loans to pay off other loans. Needless to mention, always read the fine print before availing any loan.
4. Credit Score:
Timely repayment ensures a good credit score which will exhibit your credit worthiness and it becomes better if you repay your loans on time. If you don’t pay off your loans on time, your credit score will go down. Remember, the lower the credit score, the lesser your chances are of getting future loans approved.
The Fast-Pace of Instant Loans
If you need to keep up with the world, you need to understand what it needs.The youth lead fast-paced lives where efficiency and convenience are key.Instant loans provide the right kind of financial support that help people realise their dreams and cherish their loved ones. It’s not just a financial instrument but a sense of relief, comfort, and financial freedom that touches lives.