Instant Unsecured loans are loans that are granted with no collateral and within a few minutes. If a borrower defaults on the loan, it leaves the lender with few options to get paid outside of filing a lawsuit.
In the course of this article, we will be looking more into instant unsecured loans and if they’re right for you.
What is an instant unsecured Loan?
As stated above, instant unsecured loan is a form of loan that doesn’t need collateral or a security deposit to receive and is disbursed immediately.
With instant unsecured loan, instead of pledging assets, borrowers qualify based on their credit history and income. Lenders do not receive the right to take physical assets if borrowers stop making payments on unsecured loans.
You promise to repay, but you don’t back up that promise by pledging collateral.
An unsecured loan generally comes in three forms:
- Personal loans
- Student loans
- Unsecured loans
How instant unsecured loans work
When applying for an instant unsecured loan, most lenders check the applicant’s history to see if you have successfully paid off loans in the past. Based on the information in your credit report, your credit score is created, which is a shortcut for evaluating your creditworthiness.
Lenders will also want to be sure that you have the financial capacity to repay any new loans. When you apply for a loan, whether secured or unsecured, lenders will ask for proof of income.
Then, evaluation is done to ascertain how much of a burden your new loan payment will be relative to your monthly income. They typically do this by calculating a debt-to-income ratio.
Documents required for obtaining instant unsecured loan
The following document requirements are obtainable with most unsecured loan providers:
- Office address proof for self-employed individuals
- Proof of continuity of business
- Processing fee cheque
- Duly filled loan application form
- Couple of passport-size photographs of loan borrower
- Identity proof – passport, driving license, voters ID, PAN card (any one proof)
- Proof of residence – utility bill, passport, etc.
- Pay slips for last 3 or last 6 months
How to Apply for instant unsecured Loans?
The following are ways to apply for unsecured loans:
Lender’s website: A great percentage of lenders in the market now provide their services through their websites. You can visit the official website of the bank and apply for a loan with your credentials.
Loan aggregators: These are third-party loan aggregators that can help you find the best deals available in the market. With them, you can compare the different loan products and choose the best product that suits your specific needs.
Branch office: Lastly, you may also visit the lender’s branch office and apply for a loan in person. With the Internet, this choice of application is gradually going extinct. However, if you are not Internet savvy, you may use this option to apply for a loan.
Top banks in Kenya that offer instant unsecured loans
Knowing the fact that a great percentage of the risk involved in granting instant unsecured loan rests on the shoulders of the lender.
Not every credit provider out there welcomes the idea of granting unsecured loans. The following banks offer instant unsecured loans in Kenya:
National Bank of Kenya
NBA is a commercial bank and licensed by the central bank of kenya. You can get an unsecured loan of kes. 6,000,000 without collateral
Benefits
- Short processing period
- Easy payment
- No collateral required
- Top up your loan
- Easily accessible
Rates and fees
- Minimum of KSh 50,000 and maximum of KSh 6,000,000
- Interest Rate is made up of CBR + Bank Margin % p.a on a reducing balance.
- Has a minimum of 6 months and a maximum of 84 months
- Negotiation fees of 2% for first loans and buy offs. Then 1.5% for top-ups.
Internal costs
- Appraisal fees charged per individual
External costs
- Excise duty
- Insurance fee charged against retrenchment and death.
HDFC Bank
HDFC is one of the biggest private lenders in the country. The transparent process in offering loans helps customers with easy access to instant unsecured and other forms of loans.
Benefits
- Loan disbursal within just 10 seconds for pre-approved customers
- Loan disbursal within 4 hours for other customers
- Optional insurance coverage for customers
- Hassle-free application process
Stanbic Bank Kenya
Stanbic Bank Kenya is also one of the top-notch loan providers with a top-notch collection of loan products in its line-up. The personal loan offered by the bank comes with flexible terms for the benefit of applicants. They include:
Benefits
- Flexible payment and loan-top after 6 months or repayment
- Fast and hassle-free application process and fund disbursed within 48hours
What you need to provide
- Kenyan National ID
- Proof of Residence. You can come along with your utility bill or lease agreement.
- 3 months bank statement or your current payslip
- Kenya Revenue Authority PIN
HF Group
H.F Group is an integrated property and financial solutions regulated by Central bank of kenya. They are major financial institutions that offer SME loans and Asset financing in Kenya. The personal loan offered by the company comes with the following terms:
Features & benefits
- Maximum period of 36 months and Maximum amount of Kes. 500,000
- No early repayment penalties
- Attractive interest rate on reducing balance
How can I ensure my instant unsecured loan application is approved?
Applicants can follow the steps mentioned below to ensure that their instant unsecured loan applications do not get rejected:
- We should pay bills and existing loans on time to maintain a high credit score.
- In case a customer has a low credit score or has never applied for any credit before, he or she can build his/her credit score or enhance it over time.
- Ensure your earnings match or exceed the minimum income criteria of the concerned lender before applying for an unsecured loan.
- Having a stable and regular source of income also increases the chances of an unsecured loan application getting approved.
Pros and Cons of instant unsecured Loans
From the borrower’s perspective, the main advantage of an instant unsecured loan is the fact that it is risk free and gotten within a short while. If you receive an instant unsecured loan and can’t make payments, you don’t risk losing your assets.
You just put your credit score at risk. For people and businesses with instant unsecured loans, there is a high chance that your debt will be discharged if you file for bankruptcy.
Additionally, since instant unsecured loans don’t require any collateral and are paid within a few minutes after application, the lender takes on more risk. This generally translates to higher interest rates and less favorable terms.
While instant unsecured loans may be less risky for the borrower, it is important to know how much more it could cost you over its duration. You may find that putting an asset down as collateral is more beneficial than the extra money you will pay as interest.
Conclusion
An instant unsecured loan can be one of the best loan options for blacklisted people. The fact that you don’t have to provide any form of collateral and still get your loan within a few minutes is definitely an advantage to the borrower.
Especially in a situation the borrower has little or nothing to offer at all. You can enjoy instant unsecured loans from any place you are in Kenya. All you need is to login to the lender’s website or visit their physical office.