Spot loans are installment loans used to cover sudden personal or commercial expenses. They are issued by online lenders and get disbursed instantly upon applying.  

How do Spot Loans Work? 

Spot loans usually do not require any collateral or may need little collateral. There are no set credit score requirements also for the spot loan. So, borrowers who do not have a good credit score or who cannot submit collateral can also apply for this loan. However, spot loans have some drawbacks though they are highly accessible.  

Drawbacks of Spot Loans  

  • Spot loans usually have a smaller repayment duration in comparison to other personal loans. The repayment period is usually 2 years or less. 

  • Due to the shorter duration, the monthly payment may be higher compared to other types of financing.  

  • Spot loans often levy high interest rates and fees.  

Thus, a spot loan is ideal for borrowers who instantly need funds and who find it difficult to qualify for other forms of loans.