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Everything about Quick Loans and How They Work

quick loans

Quick loans are short-term loans that are designed to help individuals, small businesses, and creditors who have urgent needs and urgent deadlines. The loan is not long-term, and it is not permanent, so it is only available for a defined timeframe. But given the nature of these loans, they are very easy to apply online through a loan app and get the funds.

Different Types Of Quick Loans

Personal Loans

These are unsecured loans that need very little documentation and can be disbursed very quickly, often in a matter of hours, if all the KYC documents are in place and the lender is convinced of the creditworthiness of the borrower.

These loans can be applied online and from anywhere in just a few clicks. They can be availed by any self-employed or by a salaried resident of India. Interest rates typically vary from lender to lender and also on the amount of money that is being loaned. Typically, well-established lenders offer more competitive rates of interest than smaller ones.

Bad Credit Or No-Credit Loan

This is for those borrowers who do not have an excellent credit history to boot. They can typically get quick loans just as smoothly, albeit with a higher interest rate.

Credit Card Loan

Credit card loans can typically be taken at attractive rates of interest as long you have a good, clean record of repayments and also have a sound credit history and a high CIBIL score.

Since this loan is offer on your credit card, the lender already has all your details and usually does not need any more documentation to approve such a loan.

Gold Loan

Unlike a personal or credit card loan, a gold loan requires collateral in the form of gold jewelry or coins. But like other quick loans, gold loans also require minimal paperwork and are usually sanction within hours.

Moreover, gold loans may carry a lower interest rate than some other options, such as credit card debt.

Main Advantages Of Quick Loans

They’re Quick:

This is a no-brainer. As the name suggests, these loans can be apply online. The details are quickly verified, need very little documentation, and can be disburse very fast.

No Collateral:

As these are unsecure loans, no collateral is need to avail of them. These loans can be taken with just a few clicks as long as the lender is satisfy that the borrower has a low chance of defaulting on them.

Insurance Cover:

Some of these quick loans also offer personal accident cover and other forms of insurance to the borrower. These insurance covers can be avail free of charge or at very affordable premium rates.

Simple Process:

These loans are simple to apply for. All you need to give is some basic information, including your KYC details, and the lender will be able to pull out your details and ascertain your creditworthiness for such a loan.

Credit Score:

Even people with a bad credit history can get these loans. You don’t necessarily have to have a very sound credit history to get these loans. You can get them even if you have a chequered credit history or a poor credit score, although you will have to pay a higher rate of interest than someone with a good credit history.

However, borrowers should be cautious while availing of these quick loans, as they can come with some red herrings.

Main Disadvantages Of Quick Loans

Higher interest rates:

The most significant disadvantage of such loans is that they charge higher interest rates than other loans where a borrower needs to offer collateral. The rates can vary from 10% to more than 30%, so avail of these loans only when you have no other option left.

Penalties And Charges:

While getting these loans is easy, you can be charge heavy penalties if you do not repay on time or do not stick to your repayment schedule for the entire duration of the loan.

Moreover, even while availing of these loans, you should read the fine print carefully as some lenders could charge you very high processing fees as these loans are high risk and not backed by any security.

Conclusion

Short-term loans or quick loans are usually unsecure personal loans that don’t require you to put up any asset as collateral, except in the case of gold loans.

Even though quick loans carry a higher interest rate than other types of debt. These loans can help you navigate a cash crunch with ease.

Written by Go Business Tips

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