So you need some cash urgently because your best friends have planned a last-minute vacay that you don’t want to miss. Or perhaps you need to settle your credit card debt. Or even worse, you need to take care of a medical emergency.

There are so many of us who frequently find ourselves in a tight financial situation that seems especially stressful if your payday is weeks away. This is when instant loans come in handy. They’re unsecured, require minimal paperwork and don’t come with exorbitantly high-interest rates.

However, as with everything else in the market, there are several rumors one gets to hear about instant loans these days that can prevent you from making the right decision. Let’s help you by debunking some of the most common myths about instant loans.

1. Myth: Instant Loans Are For The Poor

Fact: Instant loans are for people from any kind of socioeconomic background

People are usually of the opinion that instant loans are for the poor who don’t have a penny to spare. This isn’t true. In fact, instant loans are only approved if the applicant is employed in a stable job and earns a certain monthly income.

2: Myth: They Charge You With Hidden Fees

Fact: All costs and fees are clearly mentioned in the loan agreement

Not only is this rumour false but it’s also illegal. By law, lenders are required to be upfront about their fees and other costs, meaning these must be mentioned in the lending agreement. There is always only one flat fee sans any hidden interest charge or extra fees. That being said, additional fees and extra interest may be charged if the applicant fails to repay their loan, although this information will also be mentioned in the loan agreement.

3. Myth: You Need A High Credit Score To Qualify

Fact: No, you can also qualify for an instant loan provided you meet other important criteria

Instant loan lenders are usually concerned about whether you can afford to repay the loan sometime soon in the near future. Therefore, your credit history won’t play a very important role here. While a good credit score can build your credibility, a bad one won’t stop you from getting approved as long as you’re bringing in a fixed amount of income every month and using a bank account.

4. Myth: Short-term loans can negatively affect your credit rating

Fact: Defaulting on your loan repayments is what negatively impacts your credit rating

The whole point of lenders checking your credit report is to see if you have a past record for making late payments. If your report shows that you’ve been punctual with your loan repayment, it means you’re a reliable borrower, which, in turn, can actually help boost your credit score!

5. Myth: Finding A Decent Online Lender Is Difficult And Can Be Risky

Fact: Finding a good online lender is not only easy but also hassle-free!

Browse the internet, and you’ll find lots of online loan-lending websites that come with calculators to help you deduce how much you need to borrow and what interest you’ll be required to pay. Instant loan online loans also require less paperwork, which means no more long queues and endless form-filling sessions. This way you can do your homework and apply for the instant loan online that’s best suited to your needs, without having to run from pillar to post!

6. Myth: Instant Loans Lenders Profit From Trapping You In A Cycle Of Debt

Fact: Instant loans can actually help you do plenty provided you’re financially responsible

Instant loans are designed to help ease current financial pressures by offering you a short-term financial aid. Therefore if you have the capacity to repay the loan in a timely manner, you certainly won’t fall into a debt cycle. It is only when you default on your EMI payments that you’re more likely to be buried in debt, especially since late payments mean paying extra fees.

7. Myth: Instant Short Term Loans Carry Exorbitant Interest Rates

Fact: While short-term payday loans carry high-interest rates, the short term EMI loans are only a few percentage points higher than bank loans

Short term loans come in two flavors, the payday loan product that provides you a bridge until your next pay check. The loan has to be repaid in full on your next salary date. These loans typically carry high interest rates as the risk is perceived to be high for this product. A person is expected to take a loan ahead of their upcoming salary date only in case of emergency situations. On the other hand, there are EMI based short term products that can be repaid in EMIs over a period of 3 to 12 months. These products are less risky and help you to spread your costs over time. Interest rates on these loans are similar but slightly higher than the interest rate offered on unsecured loans by banks.

 

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