Borrower’s Guide: Dos and Don’ts for Instant Personal Loan in India

Updated on: 08 Jan 2024 // 6 min read // Personal Loans
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With the help of a Personal Loan, you can smartly and effectually tread through financial gaps caused due to COVID 19 in your life. Whether you need cash for paying out medical bills, business invoices, or household repairs or so on, you can apply for an Instant Personal Loan, right from your home serving the lockdown.

From banks to NBFCs to digital-only lenders, you can choose an Instant Loan offering as per your requirements. The customised offers are available for all types of customers. However, you must pay attention to dos & don’ts of applying an instant personal loan in India.


1. Do ensure that you choose the right type of loan.

Each person who has a decent credit history and monthly income can choose from a host of instant loan options. You can apply for a regular Personal Loan, an Instant Cash Loan, Credit Card Loan, a Top Up, Balance Transfer, Gold Loan & so on. There is no shortage of options. So choose wisely. Assess your repayment capacity and financial health before making the decision about the type of loan you need.

2. Do recognize the urgency for loan.

Apart from assessing your monthly repayment capacity it is also important to know how fast you need the access to funds! For example if you need emergency funds in the range of Rs 50000 to 5 Lakhs for a few months, contacting an online lender such as Moneytap will enable instant access to cash within a few hours.

3. Do choose lender carefully.

Before filling an application form of a Bank, NBFC or an app-based lender, it is essential to understand the difference between their offerings. There can be striking distinctions between the offers from different types of lenders. While a bank can offer you the best of the interest rates however their credit policy will take longer to abide by; an app-based lender on the other hand may have much lenient eligibility criteria, faster processing and more customised offer at a higher APR.

For example, Moneyview offers Instant Personal Loans up to Rs 5 Lakh without any collateral or credit history requirement. Thus you need to choose the lender based on your profile.

Another important point is to borrow from an RBI registered lender only. Even if you are borrowing from an app-based lender, make sure you check the credentials & reviews beforehand.

4. Do draw a repayment plan.

This is one of the most crucial aspects. Oftentimes, when borrowing for emergencies, people tend to miss this step. Whereby, it is most important to complete this pre-step of borrowing. You should calculate and define a ball park figure that you can afford to use for monthly repayment during the loan term. Do not base repayment assessment on the money you do not have in hand such as an expected payment or a due bonus by employer.

5. Do choose a lender that offers repayment flexibility.

When borrowing for a small term, you should always ensure that you do repay in time or sooner than the loan term. Herein it is recommended to choose the lender who allows full & part prepayment without any charge. This ensures that you can repay the loan as soon as you get hold of the funds and cuts your monthly liabilities most efficiently.

6. Do assess interest rate and EMI affordability

The APR cannot be a right parameter to compare a small cash loan from a longer tenure loan. Thus it is advisable to choose the EMI as per your budget. You must assess all factors such as urgency for cash, if you meet eligibility criteria or not, is loan meeting your purpose completely, if you can repay loan within the stipulated time & so on before choosing the lender.

7. Read the fine print and understand terms & conditions

Last but not the least, you must read the loan terms and conditions carefully. Learn about all types of fees & penal charges beforehand.

8. Do choose tenure carefully.

A lot of people make a mistake of choosing the longest available tenure for a loan. For a longer tenure increases the overall cost of interest on your loan. The approach on the other hand should be to repay in the shortest possible time, affordably. Thus, it is of significance to choose the tenure of the loan according to your financial health & not the longest one.


1. Don’t make lowest interest rate the only deciding factor

Overlooking other terms & conditions and focussing only on rate of interest could be a huge mistake. Look at other factors as well; such as, foreclosure charges, loan processing fees, and other associated fees. At times, the lowest interest offer may be costlier than the second or the third lowest options, for it may have higher processing fee & other hidden charges. So, don’t forget to conduct a comprehensive comparison before choosing a loan.

2. Don’t borrow from unknown/ non recognized lenders

Often times, during emergency we tend to make decision in a sheer haste. Avoid the traps that may be too-good-to-be-true. A lot of peer-to-peer lending options & more are available online; however I recommended: go along the RBI’s shield. Choose the recognized lenders.

3. Don’t borrow from personal contacts, opt for a formal loan

It is always recommended to keep money away from relationships or soon it may start testing the depth of water. It is not only embarrassing to borrow from personal contacts; it may be even detrimental to your relationship if you fail to meet the repayment in time. However, as the formal loans are borrowed as Term Loans, you can gradually meet the repayment and tread through difficult financial situation in your life. When you borrow from banks/NBFCs none of your peers can ever know about your financial life and you can continue to enjoy the same social status ever.

4. Don’t forget to check your Credit Score

Before applying for a loan, it is always recommended to check the CIBIL rating. You can check your Credit Score online for free. Knowing your score will help you compare the different Personal Loan offers more accurately. The lender will always offer you better rate of interest with a higher Credit Score. Also, when you check your credit information report before applying for a loan, you basically get to know if you are meeting the lender’s loan eligibility criteria or not. Thereby, you ensure that your loan application sees only success. You can thus choose the right set of lenders and go ahead as required.

5. Don’t forget to compare the loan offers

It is always useful to contact a professional service and compare the best offers available in the market. They will help you compare loan amount, interest rate, tenure & other terms without any charge.

6. Don’t borrow more than 50% FOIR or EMI/NMI ratio

The banks and NBFCs will always offer you loan basis your EMI/NMI ratio, however some of the new age lenders may offer you more than this ratio. Do not borrow more than what you can repay comfortably. Such a loan will be a high cost loan and will further add to your repayment burden. This can be a perfect recipe for financial disaster.

In case of emergency consider a secured loan, as it will ensure low EMI and help you manage loan in time. When you already are serving EMIs for multiple loans and bills, it is recommended to repay the older loans with low interest cost and boost your score as well as EMI/NMI ratio before starting a new loan. This will further ensure better rate of interest on the new loan.

7. Don’t borrow before accessing the loan requirement correctly

While this sounds so basic, still a lot of people do not assess the loan requirement. They borrow either according to the eligibility for loan quantum or on the rough estimates of how much they need. In both situations, there are chances for shortfall or surplus of funds in your bank account. In case of shortfall, you will soon require another loan and hurt your credit rating; while in case of surplus, you will be bearing an unsolicited interest cost for no purpose.

8. Don’t share your passwords or pins

When you apply for an instant Personal Loan Online, the verification is based on eKYC. You upload your Aadhar & PAN, and the lender will verify the details using digital mode only. In this whole process, you should ensure that you never share your password or PINs with anyone, including the lender’s officials. When we access digital capabilities for financial matters, it is essential to protect your Identity & Bank Accounts.

Now that you know about the dos and don’ts of Instant Personal Loans, apply confidently for the best offer with best of the terms. Use negotiation & strike a great deal!