What is an Instant Cash Loan and it’s Alternatives?

Posted by Shubham kalje on February 12th, 2020

Life keeps us surprised and sometimes you may not be prepared to tackle those at the very moment. Especially financial emergencies are something difficult to deal with. The condition gets much complicated if you need hard cash when you lack funds. Due to medical emergencies or unfortunate incidents, you may need to arrange money almost immediately. In such a crisis, our regular income falls short or we simply cannot wait till our monthly salary gets credited to our account. So, you can then opt for a short-term loan, such an instant cash loan for monetary contingencies.

In India, banks are coming with a wide range of products to meet customer’s demand for instant money. Now, it is possible to survive through financial emergencies by opting for easy loan plans like instant cash loans and personal loans.

• Here, you do not have to keep collateral. The funds can be used for any needs. Also the borrowing tenure is short, between 1 month and 9 months.

• Borrowing amount is between Rs. 10,000 and Rs. 75,000. Under a short-term borrowing facility, you can get the money within a matter of 2 hours to 24 hours. 

• The funds are disbursed to your bank account almost immediately after approval of the loan.

• Such loans come with minimal paperwork. You can apply for the loan online. Thus, simply upload the soft copy of the required documents with the loan application.

Why Take Instant Cash Loans?

This type of funding option is actually a short term loan scheme designed to offer funds at the time of need. As the name suggests, such loans should be repaid in short tenure up to 9 months. This borrowing facility comes with the condition that you have to pay back the loan on a particular date every month, in the form of regular EMIs.

Usually, you get the loan amount transferred to his/her bank account within 30 minutes from the time of loan sanction. Being an unsecured type of borrowing, your monthly salary, repayment capacity, and existing financial liabilities are the primary factors in deciding the loan amount.

Eligibility Criteria of Instant Cash Loan

Below-given are the eligibility norms for this loan:

• You should be a salaried person.

• You must be at least 23 years of age.

• Your personal credit score/CIBIL score should be 600+.

• You must receive a regular monthly salary.

• The net monthly income must be at least Rs. 25,000.

• The salary must come to your bank account.

• Cash salary is not acceptable.

• You must submit your KYC documents (PAN Card, ID proof, and address proof).

• You should provide your latest passport-sized photograph.

• You have to submit income proof in the form of salary slips, the latest bank account statement that shows the drawn salary.

Instant Cash Loan Repayment Terms

You can repay the loan part by part in monthly instalments. Just like a traditional personal loan, an instant loan comes with a variety of benefits. These include flexible tenure and repayment terms. The loan tenure is based on your income and repayment ability. So, you can pay the EMIs without facing any financial burden. Unlike instant cash loan, a personal loan comes with the facility of larger quantum of finance. The borrowing amount starts at Rs. 1 lakh. The maximum amount can go up to Rs. 40 lakhs. The lending amount differs from one borrower to another.

Alternatives to Instant Cash Loan and Balance Transfer Option

We have already spoken about personal loans, which are the best alternative to instant loans. This borrowing facility also comes with a balance transfer option. Personal loan balance transfer is about moving the unpaid principal amount to a different bank for a lesser rate of interest. Most banks allow loan transfer and if the applicant has not defaulted on any EMI payment, he/she is eligible for a personal loan balance transfer. 

However, it is advisable to carry out a thorough analysis of the additional benefits that in turn depends upon a number of factors. The time for balance transfer is perfect when the borrower is in the initial periods of their loan repayment duration.

1. The principal reasons why personal loan transfer is becoming popular are: 

• A lowered rate of interest offered by the financial institution to which the loan is being transferred.

• An increase in the loan tenure.

• Or, both of the above.

Banks charge little or nothing at all for the balance transfer, as in most cases the customer would have sincerely repaid a decent percentage of the balance outstanding. 

2. Total EMIs

Your new bank might allow a lowered monthly EMI, but you should keep in mind that such a benefit would affect your outflows in total as your interest adds up continuously. Thus, it is important to compare your new EMI with your present one, before deciding to proceed. 

3. Other Charges and Processing Fees

You must also take into account the legal charges, processing fees, valuation fees, and other charges in order to compare the sum-total of all charges with the reduction in EMIs offered by the new bank. Certain banks calculate the processing fees as a specified percentage of the unpaid loan amount while others decide it on the basis of your monthly income and employment. You should also consider the fees that the new bank charges for account closure.  

4. Collateral for Outstanding Amount

If you have repaid a considerable portion of the loan amount, you must ensure that the original security for the transferred loan is not pledged. Instead, it is advisable to provide collateral with a value lesser in comparison to that of the original. If your bank is rigid about keeping the original one, you should be negotiating on the rates of interest.

5. Process for Personal Loan Balance Transfer

• The process of transferring a personal loan is hassle-free and can be achieved in just a few steps. Primarily, you need to make an application to their current lending institution so that their loan is transferred to another lender. 

• On the basis of the application, the bank issues a statement and NOC that mentions the outstanding amount. A letter of consent is also issued. These documents need to be submitted in the bank in which you want to apply for your personal loan transfer. 

• Subsequently, the new bank examines the furnished documents and if those are found to be okay, your request is approved. The bank then sanctions the sum for closure with your present lender. 

• When all transfer formalities are completed, your documents get transferred to your new lender following which all ECS and post-dated cheques with your old bank get cancelled. 

• Often, you might be needed to pay a processing charge that ranges between 0.5% and 1% of the outstanding loan balance. 

The lending institution to which you are transferring your loan considers your loan as a fresh one which will again require you to follow all related procedures such as credit score, documents essential, legal verification, etc.

To Conclude

In case you are in urgent need of money for a short span of time, an instant cash loan or a personal loan is the best in bargain. Apart from instant financial relief, such loans offer you enough time to put your finances back on track and repay the loan without losing peace of mind.