Things to consider before taking instant loan

You might have received an email or an SMS informing you that you are eligible for a pre-approved loan of a specific amount and you could avail the loan any time by simply accepting the offer online or by visiting the nearest bank branch. These are called ‘instant’ loans and are offered to prospective borrowers. These loans can be pre-approved or approved after submission of online application and disbursed instantly. These loans are offered to customers who have a good track record of payment of loans and other dues—basically to customers having good credit history.

So, if you have received such an offer and if you are in need of money, should you accept the offer? No doubt, an instant loan is quite convenient as there is no cumbersome paperwork involved and, most importantly, the disbursal is immediate. But should you go for a loan just because you get the money immediately and there is no paperwork to do? Not a very good idea. This is because before you take a loan, you need to check things that matter the most. Let us look at what these things are.

Rate of interest: The rate of interest charged by the banks on such instant pre-approved loans may be higher than other types of loans since these are unsecured loans and you may not be required to offer any collateral against the loan or provide guarantors to the loan. So, you need to check the rate of interest that the bank will charge you on the loan, and if it is higher than other available options, you need to consider the other options before you make a choice.

Fees and charges: The bank may charge higher processing fee or levy a higher prepayment charge on these loans. Therefore, you need to go through the terms and conditions of offer of these loans carefully before you decide to take the loan.

If you are satisfied on all these counts, then you can go for the loan; otherwise, you can look for a better option.