An unexpected bill or a repair situation that can’t be overlooked – small cash requirements are enough to get you stressed when you’re in the last week of the month and there’s still some time before your salary gets credited. In fact, most adults experience a financial crunch because they can’t manage to fit certain bills in their budget if they come as a surprise. So, what can be done? The answer is simple – small personal loans.
What is a small personal loan?
Small loans are instant loans that people who have urgent small cash requirements can request. The loan amount is relatively small and loan terms are shorter, which is why these loans can be available without any collateral. Many people consider small instant loans a reliable option for:
- Meeting out-of-budget home expenses
- Buying the latest gadgets that exceed the monthly budget
- Meeting unexpected medical expenses
- Paying unexpected utility bills
How do small personal loans work?
Each lender is different and has its own loan policies, fees, and interest rates. For example, some lenders may set a minimum borrowing limit while some may make a credit line available so that you can borrow small amounts as and when needed.
Most small personal loan online lenders would require you to establish your identity through Permanent Account Number (PAN). And based on your monthly income, you will become eligible for a certain loan amount. The amount available to you will also be based on your credit score. Once you are approved for a loan amount, you can either set the repayment period yourself or follow the repayment period given by the lender as per its policy. Initially, you will be eligible for a smaller amount, but you can become eligible for a relatively larger amount if you improve your credit score.
Pro tip: You can take small personal loans and repay them on time to improve your credit reputation and become eligible for larger loan amounts.
How do I apply for a small personal loan?
Personal loan lenders may have different loan application processes, but in most cases, you will be required to submit:
- PAN details
- Proof of income
- Credit Score
Online personal loans can be conveniently requested through the lender’s online portal or application. You will need to follow these steps:
- Register yourself on the platform.
- Submit your application through documentation such as PAN details and proof of income.
- Wait to get the approval.
- Complete KYC documentation once you get approved for the loan amount requested.
- Withdraw the amount.
Note: These steps vary depending on the policies set by the lender.
Once you receive the loan amount, you can repay it in monthly instalments over a short repayment period or repay the amount completely in a single instalment. However, some lenders also charge pre-payment penalties on paying off the loan amount earlier. So, make sure to check if there is any such policy in place before you choose a lender.
With so many options available online, taking small instant loans has become easier. But I would still say that you should rely on loans only if there is no other alternative. Moreover, if you assess your repayment ability before borrowing an amount, you will be able to pay it off without running the risk of negative credit history. Make sure you’ve thought everything through so that you do not end up knee-deep in debt.