How to get an instant loan in India is a question I have often thought about. Like every ordinary Indian, sometimes I too need cash instantly for various reasons.
If the amount is small, relatives and friends do lend something. Yet, when it comes to larger amounts of money, people often back out for various reasons.
This scenario made me discover various ways to get instant loan in India. I have tried some of these methods and they do work well.
Therefore, I will list some of these tested ways to get instant cash when you need it the most. Before I proceed, let me explain something about instant loans.
What is Instant Loan?
Generally, banks and other lenders take long to process your loan application. Further, there are no guarantees the loan will be granted.
Instant loans are very different. The lender takes between one hour and a day to sanction your loan.
That is if you meet their criteria such as credit score and other parameters. Others are willing to overlook your poor credit scores too.
In some instances, the money is within your reach and can be taken instantly, but you remain unaware of this facility.
Generally, instant loans are of small amounts only. They can range between a few thousand Rupees to Rs.500,000.
I hope you have got the basic idea about what instant loan is. Now, let us explore how to get instant loan in India fast.
Different Types of Instant Loans
Understandably, there are different types of loans in the money market. Some are for people like us while others are for businesses.
Consider any of the below options the next time you need instant cash loan in 1 hour for any emergency.
Non-Banking Financial Companies
If you are truly desperate and do not know how to get instant loan in India, approach any of these new breed Non-Banking Financial Companies (NBFCs) that operate online.
They offer loans within an hour for amounts up to Rs.100,000.
NBFC in India are in trend these days due to its nature of fast disbursal. Usually, they will grant you a loan immediately without much fuss about your credit score.
Most of them are smartphone app-based which makes it even more easy to apply on your fingertips, all you have to do is upload your documents online and get it processed.
These NBFCs ask for every personal detail that may include your social media account, email, phone contacts, bank statements, Aadhar card and other proof of identity and residence among others.
However, a Permanent Account Number(PAN) is a must and if you don't have one then you can apply for pan online.
Interest rates charged by these new breed NBFCs are extremely high. For example, on a loan of just Rs.5,000 for a period of 30 days, you will end up paying Rs.6,200.
Failure to pay on time can attract very high penalties and unwanted consequences.
Another way to get an instant loan in India is literally by pawning your gold jewellery.
Here, you need to keep gold jewellery as collateral against the amount you borrow and it is also the easiest way of getting instant cash loan in India.
Abroad, this service is called ‘pawning’– a rather derogatory term- while in India, it is sugarcoated as ‘Gold Loan’. Usually, Gold Loans carry an interest rate of five percent to seven percent per annum.
You can get a Gold Loan within 15 minutes to 24 hours. The bank or NBFC will check whether the gold jewelry you are pawning is authentic and its market value, before sanctioning the loan.
In case you fail to repay, the bank or NBFC gets your gold jewelry. The lender bank or NBFC will also ask proof of ownership of the jewelry, PAN card, Aadhar card and other financial details before sanctioning a Gold Loan.
Select banks in India offer instant loans in the form of Salary Overdraft. To get such instant loans, your salary should be credited to your bank every month for a minimum period of six months.
Salary Overdraft is a fairly safe way of getting instant loan.
The bank will adjust the overdraft against your salary. Usually, most banks will provide a Salary Overdraft that is twice or thrice the amount of your monthly salary that goes into the account directly.
Interest rates on Salary Overdraft are fairly low and can range between two percent to five percent per annum.
Understandably, there are late payment fees and processing charges that apply too.
Loans against Fixed Deposits
Instant loans are also available from banks and NBFCs against your Fixed Deposit savings. Usually, 75 percent of the Fixed Deposit / Term Deposit amount will be given as loan.
This is also a safe way to take an instant loan, since the lender has a collateral. If you fail to pay the money, the lender can forfeit the entire Fixed Deposit amount.
To take a loan against Fixed Deposit/ Term Deposit, you have to ‘pledge’ the certificate and money to the lender.
This loan is granted within 24 hours, after the lender verifies your credentials and authenticity of the Fixed Deposit certificate.
The lending bank or NBFC will charge an interest rate that is slightly above what your Fixed Deposit fetches.
For example, if your Fixed Deposit for a year attracts interest of six percent per annum, the NBFC or bank will charge you eight or nine percent. Hence, the interest is just between two and three percent, in the real sense.
Instant Credit Card Loans
Credit card holders can get instant loans in two ways. The first is by availing cash advance on your credit card by withdrawing the money from an ATM.
The other is also a form of cash advance that can be taken from banks. I will explain the difference between the two.
If you are taking cash advance, all you need to do is visit an ATM and withdraw cash using credit card.
However, you are charged a stiff cash advance fee and other charges on such cash withdrawals.
Also, this facility is available only if you have adequate spending limit available on your credit card.
The second is by applying for credit card loan from another bank. This means, your credit card is from one bank but you are taking loan from another.
Both these types of instant loans come with extremely high interest rates. In fact, financial experts advise against withdrawing money and taking loans against your credit card.
In some instances, you may end up paying as high as 36 percent or more interest for cash advances and credit card loans.
Instant Loans Against Securities
Another way how to get instant loan in India is by pledging your securities. To elaborate further, equities or shares, Mutual Fund investments.
Systematic Investment Plans (SIPs), government and corporate bonds are called securities.
You can pledge these securities to a lender and get instant loan in India.
Loans against securities are also available for individuals as well as businesspersons. You can get instant loan for Rs.500,000 to Rs.2 million in this manner.
Instant loan in India against securities offers great flexibility. You can opt to take instant loan on all securities or select ones, such as few units of a Mutual Fund.
It is also possible to customize repayment options with NBFCs and banks.
Loans against Property/ Real Estate
As individual or business having property/ real estate, it is possible to get an instant loan. You can raise money up to a maximum of 75 percent of your property’s market value at the time of taking the loan.
Remember, the lending bank or NBFC will calculate your property value based on government rates and not those prevailing on the real estate markets.
Instant loans against property are usually given within 24 hours of application.
Here, the lender gets full rights to acquire your property in case of defaults in repayments. Instant loans against property are usually of long tenure– 15 years or more, depending upon the lender.
There are several terms and conditions you need to fulfil before getting an instant loan on your property.
You should be the sole owner of this property. If there are partners like spouse, their explicit consent is also needed.
This is an illegitimate way to get an instant cash loan in India and hence, not recommended.
Just for information, there are thousands of private and unlicensed money lenders that operate secretly across the country.
These persons are called ‘usurers’ in English. These usurers charge a very high-interest rate that can throw your finances into a tailspin.
For example, they can charge an interest of Rs.1,000 per month for every Rs.10,000 you borrow.
Usury is strictly banned under Indian laws. It is also a criminal offense in India to lend money on interest without license.
And it is a greater offense to charge high or predatory interest rates from borrowers. Taking instant loans from a usurer can land you in prison too.
There are several instances where police have arrested usurers for harassing borrowers. These criminals can also manipulate your identity and bank details to keep you mired in the loan trap.
Usurers can also harass your family members or you frequently, should you delay payments. Also, they resort to criminal methods to recover their money.
In Indian state, Kerala, these usurers are called ‘Blades’- a term that signifies horrific practices against customers that fall into their vicious snare.
The next time you wonder how to get instant loan in India, remember these eight choices. Most of us would be anxious to lay hands on the money at the earliest.
However, it is worth knowing that some types of instant loans come at very high interest rates.
Hence, take a careful decision on how much you need and are willing to repay for an instant loan.
In most cases, instant loans are not ‘INSTANT’ in the truest sense. They can take up to 24 hours in most cases.
Lenders sometimes require time to verify your credentials before giving you the money. Usually, instant loans in India are credited directly to your bank account.