Introduction
The process of loan application and approval has become easier and faster these days because of digitization and the linking of the process with an Aadhar ID. However, it still has a certain turnaround time, which one might not be able to afford in some emergencies. Whether you are facing an emergency, need to cover unexpected bills or require extra funds for a time-sensitive opportunity, fast loans can provide the financial support you need in a timely manner. Also called ‘Payday’ loans, these loans come with their share of benefits and some drawbacks that one must keep in mind while availing these loans. In this article, we will explore the key features, benefits and considerations associated with fast loans, empowering you to make informed decisions when seeking quick financial assistance.
What is a Fast Loan?
A fast loan, also known as a quick loan or instant loan, is a type of loan designed to provide borrowers with quick access to funds for urgent financial needs. Fast loans are typically characterized by a simplified application process, speedy approval and rapid disbursement of funds. Individuals, small businesses or anyone can apply for these fast loans online if they are in urgent need of money. Fast loans are commonly offered as short-term loans, with repayment periods ranging from a few weeks to a few months.
The purpose of these loans is to address unexpected financial emergencies that may arise during the month and repay them using upcoming paychecks. They may be available through various financial institutions, including traditional banks, online lenders or specialized lending platforms. There is a wide range of mobile applications and online platforms providing fast loans in India today such as ZestMoney, KreditBee, Fullerton India and Smartcoin.
Features of Fast Loans
Fast loans typically come with several key features that distinguish them from traditional loans. Here are some of the features of fast loans:
#1. Quick Application and Instant Approval
Fast loans have a simplified application process. Borrowers can typically apply online or through mobile apps, requiring minimal documentation and paperwork. These loan applications get instantly approved and one does not have to wait longer than a few minutes. You just have to provide some basic information and share some standard documents such as a PAN card and you are good to go.
#2. No Requirement for Collateral
Fast loans are unsecured, meaning they do not require any collateral as a prerequisite for approval. This is ideal for someone in financial distress or with stressed assets.
#3. No Credit Checks Required
These loans can be availed even with low credit scores. This means that your relatively poor credit history will not affect your ability to get short-term loans in an emergency situation. However, the interest rates may depend on the credit score and you may be charged very high in case of low credit scores.
It is important to note that the specific features of fast loans can vary among lenders. Borrowers should carefully review and compare the terms and conditions, including interest rates, fees, repayment schedules and any additional charges, before committing to a fast loan.
Benefits of Fast Loans
Fast loans offer several benefits that make them a convenient and practical financial solution for individuals facing urgent or unforeseen expenses. Here are some key benefits of fast loans:
#1. Ease of Application
The fast loan application process for an instant loan requires minimal steps and it can be easily done through a mobile application. Most applications even provide a 100% paper-free application process, thereby, eliminating multiple visits to the bank branches.
#2. Quick Approvals
The approval process is quick and red-tape free. This is especially beneficial in case of urgent need for funds.
#3. Quick Disbursal
The loan amount is disbursed very quickly, enabling you to meet your immediate requirements. The transfer process is almost instant and seamless.
#4. Credit History is Not a Roadblock
Having a low credit score does not prevent you from getting an instant loan. However, it is important to note that having a good credit score helps you in getting the same loan at lower interest rates.
#5. No Collateral
Collateral is not required for fast loans, which means that even if your financial assets are under stress, you can still fulfill your urgent financial needs and repay the loan later. The absence of collateral provides flexibility and allows individuals to access immediate funds without risking their assets.
#6. Convenient Repayment
You have the flexibility to conveniently plan your loan repayment. While the standard loan term is up to 12 months, you can close off the loan earlier as per a repayment schedule that suits your short-term liquidity situation.
#7. Minimal Documentation
A bare minimum of documentation is required to be completed for the fast loan application process.
#8. No Application Fee
Fast loan applications often do not incur any fees.
Disadvantages of Fast Loans
Hefty Penalties
In case you miss repayment as per the agreed-upon schedule, hefty penalties are imposed and you might end up paying far more than what you borrowed.
High-interest Rates
Fast loans come with very high-interest rates as compared to other secured loans. Therefore, one must avail fast loan only in case of utmost emergency. They should not be used to cover up poor financial discipline, and should only be used in genuinely urgent situations.
Short-term Repayment
Fast loans come with a short repayment period which is strict and leads to penalties for failure to repay. It becomes difficult to manage the same if one does not have a steady income that can be used to pay off the loan in time.
Debt Traps
Fast loans could create debt traps for those who become overly reliant on them to meet their not-so-urgent needs. Taking out fast loans to repay older fast loans, for example, creates a situation of bad financial health and a debt-trap-like situation.
Questionable Collection Practices
The loan companies are sometimes known to have questionable collection practices such as extortion and data misuse. Therefore, it is important to borrow from sources that offer good terms and have a reputation for ethical practices.
Summary
In conclusion, fast loans offer several key features and benefits that make them a viable option for individuals in need of quick financial assistance. Their streamlined application process, minimal documentation requirements and rapid approval turnaround time provide borrowers with convenience and access to funds in emergencies. However, it is important to approach fast loans with caution. They can be quite expensive and may lead to a cycle of borrowing that harms your financial well-being. Responsible borrowing, a thorough understanding of terms and conditions, and careful consideration of alternatives are essential when utilising fast loans to ensure they serve as a helpful financial tool rather than a burden.
Are you looking for a perfect financing option? Visit Tata Capital today for flexible and hassle-free financing options. With attractive interest rates, quick approval and a simple application process, Tata Capital makes it easy for individuals to get the funding they need.
28 June 2023
6 mins read
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