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5 Things Borrowers Should Check Before Taking A Digital Loan
With the advent of digital lending platforms, loan applications can now be completed in as little as 15 to 20 minutes and all one needs for this is a smartphone
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The way people avail loans in the current digital era differs significantly from how it was done before. . In the traditional lending process, loan seekers have had to visit the bank several times, wait in long lines, as well as submit numerous documents for verification. And even after undertaking all of this, there was no certainty that a loan would be approved.
However, with the advent of digital lending platforms, loan applications can now be completed in as little as 15 to 20 minutes and all one needs for this is a smartphone. Borrowers can leverage a variety of advantages that come with the digital lending process, but they must keep a few things in mind before applying for a digital loan.
Choose diligently: There are a plethora of lenders available in the market, all eager to entice borrowers with lucrative loan offers. However, not all offers are suitable for all people. Thus, borrowers should not be persuaded by flashy advertisements or big promises that make the loan seem appealing. Rather, they should spend some time researching the lender as well as the numerous personal loan products that are on offer. Then, based on facts and analysis, borrowers must assess different loan products from various lenders and choose the one that’s best for them.
Repayment terms/flexibility: Borrowers must ensure that they are being given flexibility in paying their loan EMIs, both in terms of the EMI amount as well as the repayment methods. When someone applies for an immediate loan online, they are usually seeking a way to get out of debt. Hence, one must be careful to not get into a situation where the loan provider's repayment plan is so rigid that it causes the borrower further distress. Borrowers should be allowed to choose their repayment tenure on their ability to repay. Borrowers should also have the option to prepay some installments of their borrowed amount so that if their income rises or they wish to clear off their debts early, they should be able to increase their EMI or make a larger repayment. Furthermore, borrowers should be able to choose from a variety of repayment options, such as UPI, wallets, online banking, and cards.
Processing time: Instant loans are often distinguished from other forms of loans by the speed at which they are processed. However, since instant loans require back-end verification as well, companies that offer them online may take longer (up to 48 hours) to process one's loan application. Thus, before selecting a digital loan provider, it's always a good idea for borrowers to examine how long it will take for the funds to be credited into their bank account.
Check credibility: Before availing a loan, a borrower must research and learn about the lender's credibility. They should do this by going over customer testimonies, reading both negative as well as positive reviews on the app store, counting the credible number of lenders on the platform and determining the number of customer base, which can be easily benchmarked by number of installs. Additionally, one should also check if the platform is affiliated with a verified bank or is a verified lender registered with the Reserve Bank of India.
Transparency of operations: The loan provider should be transparent when it comes to disclosing details like processing charges, loan tenure and offers as well as documentation like loan sanction letter and name of lending entity in the loan agreement. Further, an app providing loans for shorter durations without implementing KYC or providing fees details or legitimate addresses, calls for caution and the borrowers must be wary of it.
Although the aforementioned points may seem obvious, many people still approach the loan application process fully unaware of these factors, which should not be the case. In this ever-changing and constantly evolving world fueled by technology, it’s important to be mindful of these tips to achieve the best and safest possible deal for loans online.
Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.