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Personal loans vs instant loans differ primarily on the terms of approval and repayment schedule. Read through to learn more about this.
Instant and personal loans differ in several key aspects, including the amount of money you can borrow, the length of the loan, and how quickly you can get the money.
When it comes to the quick access of funds, choosing the best alternative can be a bit of a challenge. Each option comes with its own set of benefits and limitations.
Therefore, read along to learn more about the specifications and differences between personal loans vs instant loans.
What Is a Personal Loan?
A personal loan is an unsecured credit option provided by financial institutions. It is approved based on factors such as repayment capacity, credit history, income level, profession, and employment history.
Known as a multi-purpose loan, it can be used for any immediate needs and comes with a fixed interest rate and regular monthly payments.
What Are the Features of a Personal Loan?
The following are the key features of personal loans:
Wide Range of Tenure
When it comes to personal loans, most lenders offer the flexibility to pick a loan term that suits your financial situation, with options typically ranging from 1 to 5 years.
Flexible Repayment Options
You can repay your personal loan in flexible EMIs. Choosing a shorter duration helps you pay off the loan faster and save on interest, while opting for a longer duration lowers monthly payments but increases the total interest paid.
Tax Benefits
A personal loan comes with tax benefits where you can claim a tax deduction of up to ₹2 lakh if you use the funds for purposes like home renovation or construction.
Benchmark-Linked Interest Rates
Personal loans from RBI-approved banks and NBFCs are linked to benchmark prime lending rates, offering greater transparency in borrowing costs.
Flexible Use of Funds
Unlike car loans or home loans, which are given for a specific expense, there are no restrictions linked to the usage of personal loans.
What Is an Instant Loan?
An instant loan is a type of personal loan that is taken for a short period of time. These loans are quick and easy to obtain, often without the need for a high credit score.
Instant loans are generally chosen for urgent situations or for expenses that require immediate funds.
The only drawback of instant loans is that they constitute a high rate of interest. Default penalties are charged by the lenders if you fail to repay the EMI on time.
Additionally, instant loans involve a one-time processing fee and do not require any collateral.
What Are the Features of Instant Loan?
Most key features of instant loans are similar to those of personal loans. However, here are some notable features of instant loans that you should be aware of:
Quick Fund Availability
If you require funds urgently, an instant loan is the ideal choice. Its fast approval and disbursement process saves you time, effort, and associated costs.
No Minimum Paperwork
Instant loans are processed online and thus require minimal paperwork and documentation. This makes the approval and disbursal process much faster and more convenient.
Collateral Free
It is an unsecured loan, meaning you do not need to provide collateral in order to avail of funding.
This makes them more accessible to borrowers who may not have assets to offer as security.
Higher Interest Rates
Due to their fast approval process and convenience, these loans often carry higher interest rates as compared to other funding options.
Key Differences Between Personal Loans Vs Instant Loans
The following table shows the difference between personal loans vs instant loans:
The Bottom Line
Choosing between personal loans vs instant loans must depend on your financial needs and preferences. For a small sum of money over the short term, an instant loan is a great option.
However, for larger amounts with longer repayment periods, a personal loan is more suitable. In case you need an instant loan, you can apply via Jar for Instant Loan amounts up to ₹5 lakh.
Frequently Asked Questions
- Which one is better, a personal or instant loan?
The ideal choice between personal loans vs instant loans depends on your needs. If you want a smaller amount in no time, you should consider instant loans; otherwise personal loans should be your option.
- Is the interest rate of instant loans higher than personal loans?
Yes, instant loans have higher interest rates than personal loans due to shorter loan tenure.
- What is the tenure of an instant loan?
The tenure of an instant loan generally starts from 3 months and extends up to 5 years. It has a shorter tenure compared to personal loans, which might extend up to 10 years.
