What is a Small Loan? What Are the Best Ways to Get a Small Loan?

At times, you might need immediate funds to meet expenses arising from unforeseen circumstances, or there might be a good investment opportunity. In such a situation, the option of a small personal loan is your best bet.  But what exactly is a small loan, and how can you obtain one? In this guide, we will delve into the concept of small loans and explore the best methods for securing them.

About Small Loans

Small loans are nothing but unsecured loans extended by money lenders to individuals for a short period to help them meet their financial requirements during an emergency or urgency. Such loans do not require collateral. Thus, they are unsecured loans.

Applying for a small personal loan online is a straightforward process, and the funds are disbursed almost immediately. Such loans are easily available from banks, online platforms, and money lenders. However, we suggest you approach a bank or a trusted platform like KreditBee to meet your urgent financial requirements.

Benefits of Applying for Small Loans

Since small loans fall in the personal loan category, you can utilise the funds for various purposes. There is no restriction on how the amount is spent. You can use the small personal loan amount to cover tuition fees, medical bills, vacations, home repairs, etc. Such loans can be personalised to meet your urgent short-term requirements. Let us explore the benefits of small loans.

1. Zero Collateral

   Small loans are unsecured, so you don’t have to provide any collateral against the loan. These loans are ideal in situations where you do not have collateral to offer but need funds urgently.

2. Minimal Documentation

   As collateral is not required for such loans, you can apply for small loans with minimal documentation. Basic documents are enough to complete the loan application process.

3. Same-Day Approval

   Applying for loans on online platforms ensures the amount is disbursed as soon as the loan application is approved. Platforms like KreditBee disburse funds within 10 minutes.

4. No Restriction on Usage

   Whether you need to pay unexpected medical bills or wish to pay for a wedding, you can use the funds you obtain from the loan. There are no restrictions on how you choose to spend the money. On KreditBee, you can receive a personal loan for up to ₹5 lakhs, depending on your credit score and income.

5. Flexible Repayment Method

   You can enjoy a flexible loan repayment schedule, which allows you to tailor your loan repayment per your budget. For loan repayment, multiple options are available, including payments using an official link sent by the lender and UPI. This helps you improve your credit score.

How Can You Avail a Small Loan?

You can apply for a loan from the comfort of your home in just a few clicks. Platforms such as KreditBee have made loans accessible to customers. Here is how you can apply for a small personal loan:

1. Choose Your Platform

   Select an online platform or bank based on the loan products they offer. Factor in the handling and processing fees, repayment terms, and repayment options.

2. Select the Best Interest Rate

   Different platforms and banks charge different interest rates on personal loans. Analyse the options and get the best interest rate possible.

3. Check Your Documents

   For quick loan disbursal, submit the required documents. Depending on the applicant type, these include the last six months’ bank statements, Aadhaar as identity proof, salary slips for salaried applicants, and proof of business continuity for business owners.

4. Apply

   After completing all previous steps, apply for a small personal loan.

How Can a Small Loan Help Save Money

Personal loans can help you in the following ways:

1. Consolidation of Credit Card Debts

   Small personal loans generally have a lower average interest rate than credit cards, which can help with the consolidation of debts.

2. Finance Unexpected Expenses

   As there is no restriction on usage, you can use your small personal loan to finance any expense.

3. Minimise High-Interest Debts

   If you have high-interest debt, a debt consolidation loan can help reduce interest and pay the debt faster.

4. Improve Your Credit Score

   Apart from saving money, a personal loan can help you improve your credit score.

Conclusion

A small loan is a valuable financial tool for addressing short-term funding needs. To secure the best small loan, consider exploring options such as traditional lenders and online platforms. Apply for loans that match your repayment capacity. By understanding the concept of small loans and choosing the most suitable approach, you can access the funds you need with favourable terms and experience a seamless borrowing experience.