The fintech industry has made the lending process easier, faster, and simpler, replacing the tedious financial practices of traditional financial institutions with technological intelligence, sophisticated algorithms, complex analytics, and machine learning.
Simple online loan application, no collateral requirement, and disbursement of funds in less than a week has dramatically improved access to funds. The system-driven processes have not only increased transparency and convenience, but also made it viable to offer loans ranging from as low as Rs 2 lakh to Rs 50 lakh with terms as short as a few months.
India is one of the fastest growing fintech markets in the world. The county’s fintech adoption rate stood at 87% in March 2020, up from a global average of 64%, according to a report released by Research and Markets. Estimating the Indian fintech market to be around Rs 1,920.16 billion in 2019, the report says it is expected to reach Rs 6,207.41 billion by 2025.
Benefits of online loan applications
Online loan applications make it easy to finance with a click or a swipe. Its main advantages include:
Anytime, Anywhere: You can access these loans 24/7, from any internet-connected device, from any location.
Affordability: Online loans are easy and quick to access and provide business financing at competitive interest rates.
Flexibility: Businesses and individuals can access the amount they need and repay the loan at their convenience. Digital lenders also offer prepayment and partial payment options to borrowers, making digital lending convenient and flexible.
Access to Unsecured Loans: In most cases, there is no need of collateral to qualify for these loans.
Easy Eligibility Criteria: You can qualify for such loans without having to meet strict eligibility criteria.
Lower loan amounts: Businesses can access loans as low as Rs 1 lakh to buy inventory, invest in equipment, or pay vendors or salaries.
Steps to apply for a loan online
Applying for a loan today can be very simple, it just takes a few simple steps and you could have the amount paid within 72 hours.
Step 1: Choose the loan that’s right for you
Don’t be swayed by claims of the lowest interest rate or easy repayment terms. Compare interest rates and read the fine print. Knowing the terms of the loan can help you make an informed decision. You can easily find all the necessary information online.
Look for the various fees and other charges that the lender will charge. Almost all types of loans come with fees like processing fees, service fees, late payment fees, etc. Processing fees are usually around 1% to 3% of the loan amount. Additional charges such as arrangement fees and processing fees may apply. These can dramatically increase your cost of obtaining a loan.
Check if there is a charge for partial or full payment of the loan amount before the end of the term. If you can prepay the loan amount, you could save on interest payments, thus reducing your overall debt burden.
Step 2: Use an EMI Calculator to Make an Informed Decision
An online EMI calculator is an extremely useful tool for understanding the monthly repayment amount, repayment term, and the loan amount you can afford to repay. It can also help you determine if you qualify for a specific loan amount, based on your monthly salary or cash flow.
Step 3: Gather your documents
Besides the loan application form, you will need to submit some essential documents to complete the KYC process. For personal loans, these documents include:
Proof of income, in the form of payslips, income tax returns, Form 16, bank statements
Proof of age (passport, birth certificate, Aadhaar card, voter ID card or PAN card.)
Proof of address (Aadhaar card, electricity bill, passport, ration card or telephone bill.)
Proof of identity with photo (Aadhaar card, PAN card, voter card, passport or driver’s license.)
For business loans, some additional documents may be required, such as:
Proof of business continuity, such as a store and establishment certificate / tax records – VAT / service tax / GST records.
Proof of ownership such as electricity bill / copy of contract / maintenance bill, with sharing certificate / municipal tax bill.
CIBIL Score – a minimum CIBIL score of 690+ is preferred for loan approval.
Step 4: Complete the application form
Visit the lender’s website
Go to the page for the type of loan you need
Click on “Apply now”
Fill out the form with the required personal information, such as full name, date of birth, contact details, etc.
Submit the application form.
Step 5: Instant loan approval
With advancements in fintech, you may have to wait 5-10 minutes for a response from the lender. Once the verification is done and you are notified of the approval, the loan amount will be disbursed within a maximum period of 72 hours.
The Indian financial sector has evolved considerably in recent years. It is encouraging to see how easy access to financial services has become.
Advances in technology have truly removed geographic barriers to financial services while providing features like tracking loan applications, reminders for EMI due dates, and more.
The author is Director of Sales at Capital Float
DISCLAIMER: The opinions expressed are those of the author. Outlook Money does not necessarily subscribe to it. Outlook Money will not be responsible for any damages caused to any person / organization directly or indirectly.