Rathijit Sarkar is a man of high self-esteem and believes in living within means. He has never borrowed money from friends or relatives and has managed all expenses within the income. Being the sole earning member, he is very particular that no money is spent on things that are actually not needed and hence has been able to successfully accomplish the expense to income ratios. However, today he stands at a juncture where he is thinking of asking financial help from folks, though only till he gets his salary in the following month. He needs funds for an emergency and the amount required is only about Rs 15,000. While he could have managed this expense but being the fag end of the month, he is short on funds.
The above situation could be applicable to anyone. There could be times when the need for small amount can put one into an awkward situation. What does one do at such times? While there is always an option to borrow from the close relations, but thanks to spot loans arriving in India, one can bridge the gap of such small amount needs through lenders.
What is a spot loan
This is kind of personal loan which is extended to individuals based on their income. The lenders fix a limit and one can choose either full or part of the limit as disbursal amount. Most of the lenders are extending these loans to salaried individuals.
These loans have predominantly two variations, one where the loan is extended for days and generally gets paid when the salary gets credit to the account. Second where the loan amount is to be repaid in three equated monthly installments.
Amount of loan
The short term loan, up to one month, can range from 50% to 100% of the salary. The 3 month loan can go slightly higher in amount.
Rate of interest
Being an unsecured loan where the lender does not have any collateral to fall back upon in case of delinquency, the interest rates are higher than the regular loan products available in the market.
The process of such loans is mostly online and it may take only minutes before the amount gets credited to your account. In some cases it may take as low as 15 minutes for disbursal to happen.
Reporting to bureaus
While the Reserve Bank of India mandates all lenders to report the loans to credit bureaus, there are still some of these spot loan lending institutions that do not report. In case you have been advised by someone to access these loans since an active loan will impact your credit profile positively, you would need to find out from the lender before accepting the loan disbursal. Once the loan is disbursed, you can even check your free CIBIL score if the same has been reported or not.
Boon for credit impaired individuals
These lenders do not necessarily check the credit bureau reports while taking the decision on a loan application. This means that even those who have had defaults in past for various reasons, will also be able to have access to these small ticket loans.
You would need to furnish your KYC and need to have a valid mobile number and email id. An operational savings account is must for one to access these loans.
To put it simply, the spot loans act as a boon for those who want a small ticket size loan for a short term. Rather taking a hand loan from a relation or applying for a salary advance, one can apply for these and have the funds on the day these are required.
In short these loans are good for those who are looking at tiding over there urgent cash requirement.
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