Digital lending refers to the online mode of disbursal of loans. The entire process from loan approval to recovery takes place remotely, typically through mobile apps and websites. Technology is rapidly growing in the financial sector in India with automation and easy accessibility. This has given the financial sector power to grow and the opportunity to innovate the lending processes and disbursement processes. Even the people have easily adapted to digital channels to get instant, personalized, superior, and secure services. During the pandemic, people have adapted to digital lending because of its online interface of the application, disbursal, and contactless features.
five Important Things that a consumer needs to know about digital lending:
Eligibility criteria of borrowers
Before applying for a loan, a customer should check the eligibility criteria of different digital lending websites and apps. One must verify that they meet the standards set by the digital platform. If a customer cannot meet these details and gets rejected from the lenders, again and again, it will affect their CIBIL scores too. According to RBI, lenders must check for the CIBIL score of every loan/credit card applicant at the time of evaluation. The CIBIL score decides the creditworthiness and ranges from 300 to 900.
People seeking loans need to upload bank statements, address and ID proof, and photographs for applying for loans. Keeping these documents in hand helps you complete the online loan application process within a few minutes. Most digital lending platforms do the KYC verification digitally through your original documents submitted on the app/ website.
Plan your finances in advance
A planned budget helps a person to live systematically and well within the means. On the other hand, unplanned expenditure can raise the debt levels even before one realizes what’s happening.
Planning your repayment is also important in case of any type of loan. Use an online personal loan monthly installment (EMI) calculator to know more about the monthly installments by filling in your interest rate and the amount required.
Before taking any loan, borrowers can have the details of the EMI, like how much they need to pay in a month and how many months they need to pay, and plan their budget accordingly. If the EMI seems high to be able to repay comfortably, you can consider the option of taking a loan of a lesser amount that falls within your comfort repayment zone.
Digital lending companies are very conscious about the matters related to the safety and security of people’s information and are continuously working to find the best solutions for the customers and gain their trust. Such measures help build good relations between the digital lender and the customers.
Read all the terms and conditions
Before clicking ‘I agree’ on every box, one must carefully read all the terms and conditions. It will give all the minute details and prevent any miscommunication that may arise. Just carefully read all the terms and conditions before signing up for a loan application online to avoid any surprises in the future.
Maintain a good credit score
A credit score by CIBIL shows your creditworthiness as a loan seeker. Lenders can know about your credit history via this credit score, and only after that are, they convinced they would be ready to lend you money. With the help of a credit score, they determine if the person can default and anticipate the level of risk involved.
Having a good credit score will aid in getting high credit with a low-interest rate, while a weak one will bring a high-interest rate on loans taken. Hence it is advisable to maintain a good credit score. This can be done by regularly paying your EMIs and clearing credit card dues every month.
Financial institutions have been experimenting and adopting new technologies for a long time. The fintech institutions offer a wide range of products to build your portfolio and investment journey. It is easy to use, paperless, and hassle-free. The new techniques have simplified the process of lending and made getting a loan easier for customers