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What Are Digital Personal Loans?
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Most banks and non-banking financial institutions have made loan application and approval easy by going digital. You can log into the website of the bank or NBFC, fill in the application, get documents collected by a representative and get loan approval.
Now however, new alternatives are emerging for borrowers. Many digital loan products coming up promise to eliminate paperwork and reduce the time of loan approval and make sure that you get your money immediately.
Features of digital loans
1. Digital loans are basically loans where approval and disbursal are done through digital platforms – net banking, phone apps and so on.
2. They eliminate paperwork and reduce time between application and disbursal.
3. In most of the cases, credit-worthiness of the applicant is usually pre-approved so as to lessen the risk of defaults.
4. Digital personal loans only differ in terms of platform. The forms of approval and disbursal, rate of interest, EMI and tenure will be as per the issuer.
Types of digital loan products
1. Federal Bank is introducing one such product where the customer can get personal loan approval in a minute. If the bank’s conditions are acceptable to the customer, the loan money is put into his account immediately. No signatures, no paperwork needed. You can access this facility at any time.
2. There is also a variation of pre-approved loans for existing customers of a bank by making them an offer and giving them money through the ATM. Since the bank already has the financial details of the customer, they investigate the credit-worthiness of the person, and if found acceptable, offer him or her a loan when they swipe their ATM card at the machine. SBI will soon be rolling out ATM’s with this software.
3. Paytm, which is a digital payment platform will also be offering personal loans by partnering with several banks. The time of approval will be 30 minutes for smaller loan amounts in the Rs 5000-Rs 10,000 range but for bigger ticket loans of more than a lakh it would take a day or two.
4. BankBazaar.com is offering personal loans and car loans through an e-KYC platform which is targeted at salaried people. You will not have to physically submit your documents. Everything will be done online. You can upload the documents and funds will be transmitted via net banking.
Peer-to-peer lending or P2P lending is a form of digital loans. P2P lending literally means that you borrow from an individual lender. Online platforms match borrowers and lenders based on a set of criteria. Here’s how P2P lending networks typically operate: you register as a borrower, cite your loan requirement and submit documents. The lending platform has its own set of procedures to investigate your credit worthiness. Once that is done, they will set you up with an investor who fulfills your conditions.
Author Bio :- Investments had always been a topic of interest for Veena Kumari. As a student who is specializing in the finance industry, she has spent considerable time researching about such subjects. During her spare time, she indulged in writing for online portals, about her interest. Through her work, she has provided all the information you need on digital personal loans.
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