Small personal loan online: 5 key factors to consider before applying

In today’s digital age, small personal loans are a very popular source of finance for people who want money at a short interval of time. Simple online processes and fewer documents are helping these loans revolutionise borrowing money.

What are small personal loans?

Small personal loans offer instant approval with minimal paperwork. They provide flexible amounts, repayment terms, and often require no collateral. Interest rates generally range from 10% to 31% per annum with tenures extending years. Financial institutions such as: Bajaj Finserv, Airtel Finance, IndusInd Bank among others offer such loans.

Now before applying for such loans borrowers need to carefully understand several important points such as: integrity of the financial institution distributing the loan, applicable interest rates, repayment flexibility (if any), their credit scores along with other related terms and conditions such as hidden charges, processing fees etc.

It is hence important to be aware of the entire loan agreement and steps you can take to enhance your entire experience and make it safe for your long term financial wellbeing.

Here are some key factors to consider before taking a small personal loan online:

Instant approval and disbursement

In this digital age, one of the best things about small personal loans is their rapid processing speed. Online banking services provide instant approval, and money is generally credited in 24 hours. This comes in handy in case of emergencies such as hospital bills, emergency medical procedures or unanticipated home repair, relief in a hurry. 

Now it is important to understand that this ease of approval depends on a lot of factors such as your creditworthiness and consistently maintained credit profile.

Unrestricted loan sizes and durations

Small personal loans are there to meet most financial requirements. The loan amounts vary from ₹5,000 to ₹10 lakhs. Further, the repayment tenures can be opted by the borrowers according to their affordability, from a few months to years. 

Online equated monthly instalment (EMI) calculators assist the applicants in planning payments. Still, it is always prudent to reach out to the customer support division of your respective lending institution for getting complete clarity on the related terms and conditions.

Minimum documentation and ease

Compared to traditional loans, small online personal loans require very little paperwork, just ID verification, address verification, and income proof. Some lenders even accept people with bad credit scores, so it’s easier for people to use their services. It is important to note that the rate interest varies in these loans accordingly.

Collateral free loans

Small personal loans are unsecured in nature, i.e., the lenders do not request assets like property or gold to be put up as collateral. This makes it easier and permits seamless availability of funds without bringing any additional burden or risk. This is considered as an advantage of small personal loans. Still, do remember it is vital to understand the personal loan repayment terms.

Diversified application and usage

These small personal loans are eligible to be used for any number of reasons such as: wedding, vacation, home renovation, or even business needs. With lower interest rates of 10% annually and no spending limit, they provide sufficient flexibility in case of short-term finance needs.

Why should one opt for small personal loans online?

Small personal loans are transforming the credit market in India with convenience, speed, and flexibility. Salaried or self-employed, small personal loans are a suitable choice for instant financial needs without draining savings. For convenient borrowing, small personal loans online are a secure choice.

Lastly, before applying for such loans it is always important to do proper research and understand the types of lenders, applicable interest rates, repayment tenures, provided flexibility among other related issues.

So that you are able to make informed decisions. If in doubt, never hesitate in reaching out to a certified financial planner to understand the hidden pits and falls associated with such loans.

(Disclaimer: Raising a loan comes with its dangers. So due caution is advised.)