Financial emergencies may arise unexpectedly. Your car breaks down, a family member falls ill, or you lose your job unexpectedly. When urgent cash is needed, it is natural to feel concerned. However, timely financial assistance is available in the form of demand loans.
In this article, we simplify everything you need to know about demand loans: how they work, their benefits over traditional loans during emergencies, and smart tips for choosing the most suitable loan offers for your unique financial needs.
What Are Demand Loans?
Demand loans, often known as emergency loans, are a type of short-term, unsecured or secured loan that you can access quickly in times of crisis. Financial institutions and licenced lenders provide these loans swiftly as per the urgent requirements of borrowers.
Some key features that make these loans suitable for emergencies are:
Quick disbursal times: You can expect to receive the requested funds in your account within a few hours to a couple of days.
Minimal documentation: Limited paperwork speeds up loan approval compared to traditional loans. You may only need ID/address proof and bank details.
No collateral requirement: Emergency or demand loans don't typically require applicants to offer any asset as security against the loan amount.
Reasons Demand Loans Can Be a Feasible Emergency Funding Option
Financial emergencies require swift access to funds that demand loans are designed to provide through rapid approval and disbursal. Here are the compelling demand loan benefits stating why they prove to be a viable source of emergency funding over traditional lending options:
1. Get quick cash in hand to meet urgent expenses
The biggest benefit of demand loans lies in their quick approval and disbursal timeline. Within hours to a day, you can get the money in your bank account and put it towards any pressing payments like:
Hospital bills in a medical crisis
Home or appliance repairs
Paying salaries in case of a business cash crunch
Child’s school fees
Any other emergency spending
Demand loans in a financial crisis help you prevent penalties, defaults or reputation damage by arranging funds on time using these loans.
2. Manage finances comfortably until the next payday
Salary delays or job loss can severely impact our ability to make monthly bill payments like rent, Equated Monthly Instalments (EMIs), utility bills, etc. Availing short-term demand loans during such months can provide temporary relief without accruing penalties on late payments. You can repay the loan conveniently once your next pay check arrives.
3. Avoid selling assets in distress
In emergencies, people often resort to selling assets like gold, property etc. below their fair value to arrange for urgent money. Demand loans eliminate the need for this distress sale by providing instant liquid funds at reasonable rates. You can retain all your precious assets.
4. Choose from convenient eligibility and flexible repayment options
When in urgent need of money, extensive paperwork and rigid eligibility criteria discourage individuals from applying for funding. However, demand loans have easier approval norms, requiring just basic Know Your Customer (KYC) documents. Also, they offer flexible tenure options, generally from 7 days to a couple of years. You can repay the loan amount in EMIs or lump sum as per your cash flow availability. This prevents payment defaults.
Factors to Consider before Choosing the Loan Provider
While selecting a lender for your emergency demand loan, assess factors like:
Turnaround timeframe: Choose an option that promises to deliver funds to your account within 24 hours.
Interest rates: Compare rates across lenders and select a competitive offer. Though demand loans have higher rates than traditional loans, reliable lenders charge reasonable rates.
Loan amount: Apply for the specific amount you urgently require in order to avoid unnecessary interest costs.
Tenure flexibility: Opt for a lender offering customised tenures, like a 2-month EMI option, based on your repayment capability. Avoid rigid tenure clauses.
Foreclosure facility: Check if the lender allows partially or fully prepaying the loan without penalties to reduce interest expenses.
Customer service: Good support is essential in times of urgency. When finalising your lender, assess the ease of contacting executives via calls/chat, query resolution timelines, etc.
By assessing these factors based on your needs, you can choose the most appropriate demand loan to manage financial challenges with ease. Just be prudent and borrow only as much as you can repay conveniently within the stipulated period.
Summing Up
A demand loan for urgent financial needs can be a reliable borrowing avenue to handle financial adversities that require urgent attention. From quick approval to custom repayment terms and no collateral demand, these loans offer the flexibility and convenience needed in emergencies.
However, since interest rates are higher, have a prudent repayment plan in place instead of paying heavily towards debt. This will allow you to get back on your feet without adding a financial burden. Consider your options and requirements carefully before picking the right demand loan offer.
