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Key Facts To Consider Before Borrowing Small Cash Loans
A small cash loan is a safe option for borrowing money ranging from Rs. 5,000 to Rs. 50,000 and sometimes up to Rs. 1,00,000 with some lenders. This is a collateral-free loan which means the amount gets disbursed to you without pledging any form of security. A few minutes with the documentation process and you are all set for your loan amount. That being said, it is wise to keep in mind that all financial services warrant extra caution from applicants before actually going for it. Similarly, small cash loans are no different from the rest. This financial product offered by various digital players in the loan segment, therefore, requires that you do your home-work right while considering borrowing money from lenders.
Reviewing a few factors to be sure before borrowing small cash loans becomes pertinent for every potential loan applicant:
Is borrowing really necessary?
A small cash loan is an effective and fast service provided by lenders to individuals in need of quick funds. However, it is not advisable to apply for one unless you require it as the interest loans are on the higher side. An unsecured loan like small cash loan is bound to get heavy on the pocket due to the interest outgo amount. We live in a digital age and with the advent of online enterprises offering easy small cash loans, it is possible that one may get carried away to apply for one even when there is no pressing need. Such tendencies need to be kept a check on.
Purpose of Borrowing
Often, the purpose of borrowing gets mixed with your personal expenses and other miscellaneous purchases. Exercising caution here is very important as a weak purpose of borrowing leads to this type of spending behaviour. Go for the small cash loan only after clearly defining your purpose of borrowing the loan amount for yourself. Then it is up to you to stick to spending the loan amount only for that purpose. It is not unusual for borrowers to give in to their impulses and make unnecessary purchases during this period. However, it must be noted that such spending will only lead to further delay in repayment of your small cash loan.
Are you employed? Your salary must be remitted in the bank for you to be eligible for a small instant cash loan. This is the case with most lenders in the market today. A Salary account cheque is mandatory so as to establish the credibility factor and trust-worthiness of the borrower. Employed individuals have a fixed income every month which makes them eligible for small cash loans. The status of employment needs to be considered by the borrower as this can be a deal breaker in getting the loan sanctioned. Since we live in a digital age, lenders have also taken their game online lately.
All your documents such as proof of income, proof of residence, bank statements, etc. need to be in place. There is no way of getting around this one. Scanned copies of your documents are also accepted which gives you the liberty of applying for the loan from the comfort of your home. Gathering your documents in one place if they are not already is a non-negotiable step. Your CIBIL score isn’t really important but having huge loan overdue amounts in your credit history is not recommended. Sort that out before even considering a small cash loan.
Ability to Repay:
Like any other loan, this is one of the most important factors to consider before borrowing. Carefully assess and evaluate the repayment timeline according to my financial status and risk-bearing ability. Take a look at your financial backings in the form of other investments in mutual funds, fixed deposits, gold, etc. Your current monthly expenses and foreseeable expenses have to be taken into due account so as to have better clarity.
Collateral free loans always come at a slightly higher interest rate. It becomes extremely important for you to know how much money you will be paying in interest amounts at the end of the payment cycle. This provides you with clarity on your finances. Gone are the days when lenders could get away with hidden charges, exploiting the vulnerability of different loan applicants. Today, all lending companies have clearly laid out their terms and conditions pertaining to interest rates and other fees in case of delayed payments or any other situation.
These are some of the important factors to consider before applying for a small cash loan. It goes without saying that you must do your due diligence with the lending company as well and look out for reviews to know who you are associating with. A small cash loan can serve multiple purposes for you and empower you with funds whenever you need. Be sure to check all these factors doubly to be on the safer side.
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