FAQs On Collateral-Free Instant Loan

Do you need some cash urgently? Looking for an instant loan? Fed up with the traditional process that asks for security deposits? You are at the right place, dear. In this blog, you will find everything you need to know about the modern-day financial lifesavers, who have revolutionized the money-lending game. And it comes in the form of collateral-free instant loans. Let us find some necessary information.

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Q1. What Is The Meaning Of A Collateral-Free Instant Loan?

A collateral-free instant loan allows you to borrow money without pledging anything. Generally, banks will ask you to deposit some assets, like gold, property papers, stocks, etc., as security. These are known as collaterals. However, today, many fintech companies exempt you from such deposits. It is also known as unsecured credit. They check your income, credit history, and other factors. It helps them to form an idea of your repayment ability. Finally, they grant you an instant loan only based on trust. These lenders rely more on your financial background rather than taking your hard-earned assets as security.

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Q2. How Does This Loan Work?

As these companies totally rely on your digital activities and creditworthiness, you will have to go through an online process. Here, you first choose the company, download their app or visit their website, fill out an application form, upload the required documents (usually just your bank statements, PAN, and Aadhaar), and wait for a short time. Everything is verified instantly - your salary credit patterns, spending habits, EMI payment history, mobile phone usage, etc. Within a few minutes, they decide whether you can get the loan. Based on your creditworthiness, they offer the amount you can borrow.

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Q3. Who Is Eligible To Apply For Such Loans?

Generally, an Indian citizen between 21 and 60 years can avail a collateral-free instant loan. You must have a regular income source and own a smartphone. However, there are some criteria.

For Salaried Employees:

• Monthly income should be more than Rs. 15,000 (amount may change depending on the lender)

• Having at least 3-6 months of history of employment with the current employer

• A decent credit score (depends on the lender)

For Self-Employed Individuals:

• The yearly income should be more than two lakhs.

• They must have a minimum of two years of business experience.

• ITR filings continuation should be for the past 2 years.

For Students and Young Professionals:

Some lenders cater to college students and graduates, but the amounts are small.

Q4. Does The Process Involve Extensive Document Verification?

​Not at all. The old days are gone when you had to carry a thick file to the bank. These providers need very minimal documentation. Carry some basic proofs to get the collateral-free loan disbursed instantly to your bank account:

• Your Aadhaar, PAN, or passport will serve as your ID proof. 

• What about address proof? Carry your utility bills or rental agreement. Your Aadhaar card will also work here.

• Still unsure of how to show your income? Salary slips and bank statements will serve the purpose. Are you self-employed? ITR is perfect then.

• How do you prove your employment status? Show your offer letter, office ID card, or business registration documents.

So, that’s it! That’s all the documents you need! However, you must remember that the process is upgrading regularly. In the coming days, it will become more essential to provide your internet banking credentials for income verification.

Q5. How Quickly Can I Get The Money?

Much faster than traditional banks. You can receive your loan amount in your bank within 24-48 hours. If you want a further breakdown, here it is:

• 5-10 minutes for application submission.

• The bank will take 15 minutes to 24 hours for verification and approval.

• After all is complete, you will get the final loan amount within 24 hours.

Some lenders provide instant approvals, and the loan amount reflects in your bank account within minutes of approval.

Q6. Is It Safe To Take These Loans?

It is a valid concern. Especially when there are several instances of people having bad experiences with some unregulated lending apps. So, the points that you must consider are:

• Always verify before finalizing the lender and stick to apps available from authenticated stores. Choose RBI-registered NBFCs and other financial institutions.

• Carefully read the company’s data privacy policies to ensure they have proper data protection measures. Never sell your information.

• Don’t miss the fine print because it will help you understand all charges, repayment terms, and what happens if you fail to repay on time.

Q7. What Happens If I Can’t Repay The Borrowed Amount On Time?

You must understand these terms before you borrow. It differs from company to company. Still, there are some known practices like:

• Late Fees: Most companies charge a penalty for delayed repayment.

• Grace Periods: Most lenders offer a grace period of approximately 1 to 3 days without penalties.

• Credit Score Impact: Late payments will harm your CIBIL score.

• Recovery Measures: Legitimate lenders follow RBI guidelines to recover the money. However, some may reach you through calls and messages.

• Legal Proceedings: If the case is severe, for example, if the borrower does not repay at all, lenders may initiate legal proceedings.

Q8. Is It Possible To Get Multiple Loans?

There is technically no issue in availing multiple loans. However, it is better to avoid this. Several applications in a short period can affect your credit score. It gives rise to numerous inquiries. It will also increase your debt burden, making it extremely difficult for you to repay.

Moreover, multiple loan applications can temporarily lower your credit score. Also, your creditworthiness will suffer if you constantly fail to repay on time. 

Q9. Do These Loans Truly Help During Emergencies?

Of course, they do. If there is any urgent medical need or you have to book flights in advance, these collateral-free instant loans appear as saviors. They support you best during short-term but urgent needs.

Q10. Which One Is Better—A Collateral-Free Instant Loan Or A Credit Card?

Well, it depends. To some, a collateral-free instant loan may seem beneficial, while others may find the credit cards useful. Your needs matter here. Both have their advantages. Let’s have a quick look at both:

• Instant loans: They allow you to borrow a large amount, and you pay that amount through fixed EMIs and flexible tenure.

• Credit card: It is best for short-term use and comes with a specific interest-free period. But if you miss the first repayment, the interest is extremely high.

If your expense is beyond your card limit, then instant loans are preferable. So, go for it.

Some special features offered by Indian Financial Companies:

These companies have worked in a highly innovative manner. They refined their process, thinking about the future, which eased the financial complexities. What they have come up with includes the following:

• Flexible repayment options.

• Programs helping to build credit.

• Incorporating UPI.

• Attractive prizes.

Q11. Are Malpractices Common In Collateral-Free Instant Loans?

Unfortunately, yes. These instant loans have also attracted malpractices. But if you can look for the following warning signs, you are safe:

• Apps demanding excessive permissions, including access to contacts, photos, and location.

• Lenders are demanding upfront fees.

• Extremely high interest rates.

• Aggressive collection practices or threats.

• Apps are not available on authentic app stores.

• Lenders without clear terms and conditions.

• Companies with no physical address or customer support.

Thus, following these signs will help you stay safe and worry-free.

Q12. How Can I Get Loan Approval Quickly?

If you want your application to get approved, you must have the following things:

1. Maintain a good credit score.

2. Have stable employment.

3. Repay your loan on time before applying for new amounts.

4. There is no option. You must provide all information in your loan application.

5. Finally, the most crucial thing. Choose the right lender.

Follow these few tips to get instant approval for your collateral-free urgent loan.

A Few Words To Remember Before The Final Wrap!

So, if you are in a genuine emergency, collateral-free instant loans can be your savior. It primarily helps those who lack assets to pledge or need money faster than traditional banks can provide. However, you must not use these loans for unimportant lifestyle expenses.

Assess your repayment capability honestly before you borrow money. Have a clear plan of repayment. Remember, easy access to quick credit can prove dangerous. When used in a calculative way, it becomes an excellent financial tool. Otherwise, you may end up in more trouble. Act responsibly, and your life will be easier!