Instant personal loans are loans that normally allow the recipient to receive the loan in less than twenty-four hours. The loans may be secured or unsecured, depending on the nature of the loan agreement and the terms and conditions outlined by the lender. There are several common examples of the instant personal loan, including the payday loan, car title loans, and unsecured signature loans.
Perhaps one of the most common instant personal loans today is the payday loan. Essentially, this is a short-term loan that provides a limited amount of cash for a period ranging from two to four weeks. In most cases, the applicant must supply proof of employment and income, as well as copies of the most recent checking account statement and possibly a utility bill. If everything is in order, the lender processes the loan on the spot, providing the recipient with cash.
In return, the debtor gives the lender a post-dated check for the amount of the instant personal loan, plus any applicable interest. At the agreed upon date, the lender deposits the check. Once the check clears the debtor’s bank account, the loan is considered paid in full and the transaction is complete.
Another example of an instant personal loan is the car title loan. Most of the same documentation required for a payday loan is also necessary to obtain secured personal loans of this type. In addition, the applicant supplies a copy of the car title, which the lender holds until the loan is repaid. Specific repayment arrangements are made, with the debtor usually repaying the loan over the course of a period ranging from one to six months.
Unsecured personal loans are sometimes extended by local banking companies for small amounts. Usually, there is a limit on the amount that may be borrowed through this option. With this approach, there is no need to put up any type of collateral, as long as the individual has a verifiable source of income. Repayment takes place through a series of monthly payments until the outstanding debt is repaid in full.
While an instant personal loan is a great way to handle unexpected expenses, the interest rates applied are often prohibitive. Because of the greater risk incurred by the lender, most jurisdictions allow businesses that offer personal loans of this type to charge a higher rate of interest than banks and finance companies that offer more traditional loans. However, many jurisdictions are beginning to place limits on just how much interest a lender can charge on an instant personal loan. This is particularly true in the United States, where many state governments will not allow lenders to charge more than twenty percent for one of these short-term instant loans.
