What is an instalment loan?
An instalment loan is a type of loan that is usually borrowed to make a single large purchase like a car, college education, or a house. After the loan is approved, the borrower receives a lump sum, which has to be repaid in monthly instalments over the period of the loan.
Types of Instalment Loans
Some conventional types of instalment loans are:
How Instalment Loan Works
Instalment loans are loans that are paid down in instalments over a period of time. Each scheduled payment repays a portion of the principal amount borrowed and the interest on the borrowed amount. Examples of instalment loans include personal loans, auto loans, and home loans.
Features of Unsecured Instalment Loans
- Hassle-free application: You just need to fill an application form with just a few basic personal details.
- Instant approval: You will receive loan approval within a few minutes.
- Quick disbursal: Once the lender verifies your documentation, the loan amount is instantly disbursed to you. Some lenders disburse instalment loans within 24 hours.
- Flexible repayment period: You can select the loan tenure according to your financial capacity. You can use an instalment loan EMI calculator to determine whether you can afford the loan.
- Collateral-free: The loan is unsecured. Hence you don’t need to put up collateral to borrow instalment loan.
- No guarantor required: Since it is unsecured, you don’t need a guarantor to apply for the loan.
Eligibility Criteria for Instalment Loans
The eligibility criteria for instalment loans differ from lender to lender, but generally are as follows:
- A steady income of ₹ 20,000
- Minimum age of 21 years
- A resident of India
- Work experience of at least 2 years
Documents Required for Instalment Loans
- Identity proof (Valid Driving License / Valid Passport / Voter’s ID / Aadhar Card / Pan Card)
- Address Proof (Valid Driving License / Valid Passport / Aadhar Card)
- Proof of income issued by your employer.
- Salary slips of last 3 months
- Bank statements of last 3 months
Instalment Loans and Credit Scores
Getting an instalment loan and paying it off is an excellent way to create and build your credit history. A good, long track of repayment history reflects your responsible credit behaviour and boosts your credit score.