How do apps giving instant loans work?

I receive many SMS regularly offering Instant loans. Though I haven't taken such a loan before, I have an idea of how they work.
When you go the links they share, you are required to fill a short form which takes all your important details like address proof, identity proof, PAN card number and Aadhar. The PAN card number basically gives them your Credit report. This report is present for each individual which a PAN card and contains all the history of your previous loans. If you use a Credit card a lot and haven't defaulted ever, your credit card score will be superb. If you don't use a Credit card or haven't taken a loan before, then also your Credit score will be good.

Based on your credit score and your income details, these companies offer your loans. Since they are the ones giving you money, it is more a matter of THEM trusting YOU. However, since you are sharing sensitive information, you must carry out a basic check who these companies are and their trustworthiness. I have found out that many of these companies are actually financed by big banks or finance companies which gives them their trustworthiness.

If you are doubtful, you always have your own bank to revert to in case of loans but they might not be as fast as these companies.

If you have a salary account, then you can avail such instant loan facility from them. For instance, I have a Citibank account and I receive regular mailers informing me that I am approved for a loan of an X amount. Since they already know how much I earn and my spending habits, they don't need any details and can process the loan immediately. Contact your bank for more details.

Instant loans in India work the same way payday loans work. Here the difference is how much data they have and how much leverage they have in terms of rate of interest. Usually, a pretty high rate of interest applies for a high amount of loan. But even if it is an instant loan for a small amount per month loan rate can be pretty high.

They usually ask you for -

1. PAN card number
2. Adhar card number
3. Above documents copy on paper.
4. Salary statement
5. Bank statement

Once you give them the above documents. They go through human review. And then those documents are verified and the loan is approved. If it's salary dependent loan then it can get instant approval based on the bank statements. They even ask for the bank logins to check the verification side of the things.

In terms of recovery often they can do so from your company or the bank itself. if that does not work you can see that they often send the recovery agents at your home. And they recover it the hard way if they required. But often banks are involved with such startups and the companies and they tend to give quicker approval.

Make sure to avoid such loans if you are financially comfortable. Those loans tend to make things uncomfortable if the higher rate of interest is used on them which often happens with most of the startups offering such instant loan or quick early salary loan.