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Instalments Loan – All You Need to Know

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.

Shiv Nanda

Shiv Nanda is a financial analyst at MoneyTap who loves to write on various financial topics online. He also advises people on financial planning, investment choices and budgeting skills, and helps them make their financial lives better.

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