How to Choose the Right Online Loan Lender and Get Money Quickly

Digitization has enabled many lenders to offer personal loans online with quick processing and disbursals. In some cases, the loans are disbursed instantly with no/minimal documentation within a few minutes of applying for it. While most instant personal loans are offered to existing customers having excellent credit profile, many NBFCs and banks offer online personal loans even to new customers due to their online onboarding and loan processing systems.

With multiple lenders offering instant personal loans, choosing the right online lender has become challenging. To help you with the same, here are a few points that prospective borrowers should consider to ensure they avail instant personal loans from the right lender:

Check for pre-approved instant personal loan offers from banks/NBFCs with whom you have deposit and/or loan accounts 

Many banks and NBFCs offer pre-approved instant personal loans to their existing customers having excellent credit profile and stable income. As these loans are offered to existing customers, nil or minimal documentation is required, making the loan process quicker. Moreover, due to the customer’s good credit history and a clean repayment record, they are offered concessional interest rates, which usually are lower than the personal loan interest rates offered to other applicants.

Compare interest rates from multiple personal loan lenders

Personal loan interest rates vary widely across lenders. Apart from the cost of funds and margins, lenders also consider the applicants’ credit scores, employer profiles, occupations and monthly incomes while setting their personal loan interest rates. Many lenders also offer interest rate concessions during festive season. Hence, applicants should compare personal loan interest rates from as many lenders as possible and avail them at the lowest possible interest rates. Availing personal loans at lower interest rates will not only lower EMIs but also the overall interest cost, thereby reducing the overall loan burden for the borrower. 

Compare the processing fees charged by different lenders

When you apply for a personal loan, you need to pay processing fee, which can vary from 0.5% and 4% of the loan amount. As processing fee can influence the overall cost of borrowing, applicants should compare and consider it during the loan selection process. Some lenders waive off processing fees during festive seasons, while some limit the processing charge amount, regardless of the personal loan amount. Some lenders also charge lower processing fees on loan applications applied through online channels such as the bank’s website, net banking or mobile banking. 

Check the documents required along with the personal loan application

Generally, when lenders offer pre-approved instant personal loans to their existing select customers, none or very little documentation is required. However, when lenders offer instant personal loans to consumers who do not have existing lending or banking relationship with them, they usually insist on KYC documentation during the loan application process. However, the documentation process in such cases are usually online, paperless and thereby, quick. 

Check the charges and restrictions related to prepayment/foreclosure

Besides interest rates, prospective borrowers should also look into related costs and charges such as processing fees, prepayment and foreclosure charges before choosing a lender for availing instant personal loans. As per RBI regulations, banks cannot levy foreclosure charges on floating rate loans. However, in case of fixed rate personal loans, lenders are free to levy such charges. Another important point to note is that some lenders do not allow foreclosure of the loan account until the borrower has paid a predetermined number of EMI’s set by the lender. For example, the borrowers of HDFC Personal Loan can make prepayments only after the repayment of at least 12 EMIs.

Beware of Loan Frauds

Individuals looking for personal loans online should beware of the loan frauds. Individuals who are in dire need of money and are not eligible for loans from conventional lenders are more susceptible to such fraudulent activities. Hence, before availing a personal loan from an unknown loan app or fintech lender, applicants should always verify the authenticity of the lender and whether it is RBI registered. Such fraudulent sites or platforms may trick customers in sharing certain sensitive information, which may lead to significant consequences, including identity theft.


Ajay Deep

Ajay Deep is a young enthusiast who Loves Chandigarh and is always eager to make this beautiful city even more beautiful. A Mechanical Engineer By Chance and Working in an IT MNC by Choice. A Writer, Photographer and a Budding Entrepreneur. A Designer, Developer and Digital Marketing Expert. In brief : A Jack of All Trades and Master of Few :) You may reach Ajay Deep at
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