Need money? Should you take a loan that’s approved in 10 minutes? What should you keep in mind?

According to recent reports, an instant personal loan can provide funds on the very same day when you need them. Before applying, be sure to check your credit score, interest rate, EMI, processing fees, and the lender's credibility to avoid unnecessary financial burden.

Often, an urgent need for money arises, and waiting for a traditional bank loan can be difficult. Whether it’s for a medical emergency, household expenses, or an urgent payment, people look for ways to secure funds immediately.

To address such needs, banks and financial institutions now offer instant personal loans. However, while these loans provide quick access to funds, it is crucial to understand the associated terms, conditions, and costs.

Loan Approval vs. Fund Disbursement

It is important to distinguish between "instant approval" and "same-day disbursement." Instant approval means the bank has sanctioned the loan following an initial assessment. Same-day disbursement, on the other hand, means the approved amount is transferred to the customer's bank account on the same day.

Processes such as KYC verification, credit score checks, and the bank’s internal assessments can take time. Furthermore, payments made via NEFT or IMPS after banking hours may only be credited on the next business day.

What is an Instant Personal Loan?

An instant personal loan is a facility that allows customers to apply online and receive a loan in a short amount of time. Many banks and NBFCs (Non-Banking Financial Companies) use digital processes to approve loans for eligible customers within minutes. For instance, the 'FIRSTmoney Smart Personal Loan' from IDFC FIRST Bank offers eligible customers the option to borrow up to ₹15 lakh, with funds sometimes reaching the account within 10 minutes.

Check these 5 things before taking a loan:

Credit Score – Check your credit score and report before applying. A good credit score can increase your chances of securing a loan.
Loan Amount – Borrow only what you need to avoid an excessive EMI burden in the future.
Eligibility – Familiarize yourself with the lender's requirements regarding age, income, and employment.
Data Security – Verify the credibility of a loan app before sharing your personal or banking information.
Customer Support – Ensure you are aware of the available channels for lodging complaints or seeking assistance.

Understand Interest Rates and Hidden Charges

Do not base your decision solely on how quickly you can receive funds. Consider the interest rate, processing fees, late payment charges, and terms for early loan repayment. Additionally, compare the Annual Percentage Rate (APR) to get a clear picture of the total cost of the loan.

Before opting for a digital loan, ensure that the lender is a bank or an NBFC regulated by the RBI. Always request a 'Key Fact Statement' (KFS) from the lender before accepting a loan; this document outlines the interest rates and other applicable charges, helping you avoid taking on an expensive loan in haste.

Where can you get a quick loan?

Depending on your requirements, you can obtain a personal loan from banks, Non-Banking Financial Companies (NBFCs), or digital lending platforms. Existing customers may receive quick access to loans through pre-approved offers, whereas new customers might be required to provide additional documentation and undergo an eligibility assessment.