Small loans are a type of financial product that offers small amounts of money to customers for a short period, ranging from a couple of months to a few years. These loans provide financial relief with fast processing, easy accessibility, and affordable repayment terms.
These short-term loans range from ₹5,000 to ₹ five lakhs. They help borrowers cover unexpected expenses, pay bills, or finance small projects. Let’s get to know about small loans in this article:
Types of Small Loans
Small loans are classified into numerous types, each designed to meet different needs:
1. Personal Loans
Personal Loans are used for personal expenses, such as medical bills, debt consolidation and home improvements.
2. Payday Loans
Short-term, high-interest loans are typically due on your next payday. They’re often used for emergency expenses but can lead to a cycle of debt.
3. Business Loans
Small loans specifically used for business purposes, including startup costs, operational expenses and equipment purchases.
4. Microloans
Small loans are typically offered to entrepreneurs or small business owners through non-profit organisations to help expand or start a business.
5. Installment Loans
Loans repaid through fixed monthly periods over a fixed period are used for larger purposes.
Steps to Apply for Small Instant Loans
Applying for a small credit loan comes along with a few steps, the details of which are below:
● Check Eligibility: Check your eligibility to ensure whether you fall under the category of 21 to 60 years of age. It would help if you also had a stable income, a good credit score, a residence and a valid identity proof.
● Choose a Lender: Compare interest rates and terms and conditions to find a lender that meets your needs. For a better experience, opt for online or traditional lenders like banks and credit unions.
● Gather Documents: Gather the necessary documents, including ID proof, address proof, income proof, and bank statements.
● Fill Application Form: Fill out the form to submit the needed documents. The lender will verify your application and perform a credit check to approve your loan amount, interest rate, and tenure.
● Document Submission: Submit the necessary documents to support your loan requirements. For the online application, upload the documents directly onto the lender’s website or app. For the offline submission process, submit the documents at the branch.
● Application Verification: The lender will verify once you submit your application and documents. This would include your KYC and credit check to assess your creditworthiness. The bank would then approve your loan amount after a successful verification process.
● Updated Loan Amount Information: You will receive a notification of the approval along with loan details. You will then receive the loan amount through bank transfer or cash pickup.
Conclusion
Whether you’re working to fulfil your short-term needs or working towards long-term goals, small loans can help you make wise financial decisions to face life’s challenges with confidence.
By understanding the types of small loans available and following the simple application process, you can utilise your saved finances wisely. Prepare for a secure future, achieving your dreams and aspirations!
