Choosing the right funding option is tricky when you need funds to handle an emergency or fulfil a dream. Personal Loans and instant loans are the most common options to choose from. You must understand the differences between the two and decide which one best fits your needs. Let’s understand what a Personal Loan is and how it differs from an instant loan. Accordingly, you can make an informed choice for your financial well-being.
What is an Instant Loan?
Instant loan is an unsecured funding option that primarily aims to provide quick funds for emergencies. They provide fast and hassle-free funds through a website or Instant Loan app. These funding options are excellent for those who need money urgently. It’s wise to borrow them for quick financial needs like home renovation, vehicle repair, or last-minute wedding expenses.
Key Features
● Approval depends on your income and risk profile.
● Get instant funds without extensive documentation or formalities.
● You may choose a repayment period according to your EMI affordability.
● An instant loan does not require any security.
Pros and Cons of Instant Loans
Let’s look at the pros and cons of instant loans:
Pros:
● No collateral is necessary to qualify for an instant loan.
● Quicker funding access without office visits or documentation.
● Those with a good credit history find it easier to get approved.
● Lenient eligibility criteria make them easily accessible.
● The quick loan process makes them instantly available.
● You can receive cash within 48 hours of applying.
Cons:
● Strict eligibility criteria you must fulfil.
● Conducting enough research is essential to compare the loan products.
● Interest rates are competitive due to instant availability and no collateral requirement.
What is a Personal Loan?
A personal loan is a short-term funding option that lets you borrow money from a financial institution or NBFC, including for a wedding, education, home renovation, or travel plan. Obtaining these unsecured loans is easy without providing any guarantor, security, or collateral.
Key Features
● Personal Loans are approved based on your creditworthiness and repayment capacity.
● You can use the funds for various planned and unplanned purposes.
● The repayment tenure is flexible, ranging from a few months to a few years.
● Many loan providers offer quick disbursement within 48 hours.
● Factors like your financial profile, income, DTI ratio, and repayment capacity determine the size of your loan sanction.
Pros and Cons of Personal Loans
Let’s look at the pros and cons of Personal Loans:
Pros:
● A well-established source to borrow funds.
● Dealing with a trusted NBFC ensures peace of mind.
● You can borrow a loan amount according to your needs and repayment capacity.
● An EMI calculator helps you choose a repayment tenure with affordable EMIs.
● You don’t need to pledge an asset as collateral.
● You can use the loan amount for various purposes, including a foreign trip, wedding, education, etc.
● Easily accessible through a Personal Loan app.
Cons:
● Due to their unsecured nature, the interest rate is higher than that of secured loan options.
● Comparing the loan offers is essential due to the high competition in the loan market.
● Making a solid repayment plan is vital, as missing the EMIs may reduce the credit score.
Difference Between Personal Loans and Instant Loans
Let’s understand a few points of difference between Personal Loans and instant loans:
| Parameter | Instant Loans | Personal Loans |
| Eligibility | Based on credit history, income, and other criteria | Requires detailed assessment, including age, employment status, work experience, and income |
| Repayment Tenure | Short-term | Ranging from a few months to a few years |
| Application | 100% paperless and digital | Offline or online through a loan app or website |
| Loan Processing | Quick approval, minimal formalities | Detailed evaluation process |
| Disbursal | Directly to the bank account within a few hours | May take up to two days for disbursal to the bank account |
| Loan Amount | Smaller loan sanctions | Higher loan amount according to your income and repayment capacity |
When Should You Take an Instant Loan?
Consider taking an instant loan if you need quick access to funds for urgent expenses. It is more appropriate for sudden expenses, such as urgent vehicle repairs, spontaneous travel plans, last-minute wedding expenses, etc.
When Should You Take a Personal Loan?
A Personal Loan is an ideal option if you need a bigger sum and want to repay it over a longer tenure. It is more appropriate for planned expenses, such as going on a vacation, renovating the house, buying gadgets, or consolidating debt.
Stepwise Procedure to Apply for a Personal Loan Online
Follow these steps to apply for an instant Personal Loan through reliable apps like Hero FinCorp.
● Install the loan app from the Play Store
● Choose the loan amount and preferred EMI
● Enter the required details
● Complete your KYC process
● Input your bank account details
● Get real-time approval of the loan
● Digitally sign e-Mandate and loan agreement
● Receive the loan amount in your account within 48 hours
Choosing between an instant loan and a Personal Loan depends on your financial requirements and preferences. An instant loan is an appropriate option if you need a small loan amount quickly for an emergency. However, a Personal Loan is more suitable for larger loans and longer repayment terms. Evaluate your situation carefully and select an option that best aligns with your goals. The Hero FinCorp Personal Loan app can help you apply for a loan of Rs 50,000 to Rs 5 Lakh. The interest rates are competitive and repayment tenures are flexible.
Disclaimer: The information provided in this blog post is intended for informational purposes only. The content is based on research and opinions available at the time of writing. While we strive to ensure accuracy, we do not claim to be exhaustive or definitive. Readers are advised to independently verify any details mentioned here, such as specifications, features, and availability, before making any decisions. Hero FinCorp does not take responsibility for any discrepancies, inaccuracies, or changes that may occur after the publication of this blog. The choice to rely on the information presented herein is at the reader’s discretion, and we recommend consulting official sources and experts for the most up-to-date and accurate information about the featured products.
