With the advent of technological advancements and digitization, personal loans have seen an enormous leap. Due to no collateral and no end-usage restrictions, personal loans have been highly in demand in the past few years. Personal loan digitization is an icing on the cake.
Where earlier the entire loan processing, right from loan application to loan disbursal, was manual, time consuming and tedious, the process is now completely transformed. New-age finetchs, digital lending apps and net banking services have brought a revolutionary shift in the financial world. Long queues and lengthy paperworks are replaced with online loan applications, video KYC, online document submission and verification, and quick loan disbursal. Some lenders offer pre-approved personal loans with instant loan disbursal in just a few seconds.
Let us have a look at how personal loans have evolved over the past few years and how is it different from traditional lending.
Major Advancements in Lending: Personal Loan
Faster Processing
Traditional lenders usually took around 2-7 working days for processing personal loan application. With digitization, personal loan processing is now quick, hassle-free and paperless. The loan approval and disbursal usually takes only 24 hours to a few minutes. Lenders offering pre-approved personal loans offer instant loan disbursal in just a few seconds.
New-age Fintechs
The fintech platforms have brought a transformation in the lending world. The digital lending platforms have made loans more accessible and easy to avail. Most fintech platforms like Paisabazaar offer a seamless digital platform for easy personal loan application. Individuals can visit Paisabazaar website or download Paisabazaar app and check for curated personal loan offers from multiple lenders as per their eligibility and loan requirements, all in one place.
Pre-approved Personal Loans
Most lenders offer pre-approved personal loans to their select existing customers depending on their credit profile. This means, the applicants do not have to go through the application and documentation process and are shortlisted based on their creditworthiness. It also helps them to know their loan amount eligibility for a particular lender. Pre-approved personal loans are instant and are disbursed in just a few seconds, thereby, making the loan processing faster than ever.
Minimum Documentation
Digital loan applications prevent the lengthy documentation work which was otherwise involved with traditional lending. The personal loan documentation process now requires only a few important documents such as PAN card, Aadhar card for video KYC. The document submission and verification is completely online. Infact, pre-approved personal loans do not require any documents at all. This speeds up the entire loan process and the loan disbursal is faster.
Online EMI Calculation
Prospective personal loan borrowers can now use online Personal Loan EMI Calculators to evaluate their total borrowing cost which was not possible with traditional lending. All they need to do is enter the interest rate, loan tenure and loan amount in the EMI calculator and get the EMIs and total interest cost to be paid throughout the loan tenure. This helps the individuals to assess their repayment capacity and apply for the loan accordingly.
Loans for New-to-credit Customers
No more rejection of personal loan applications due to poor credit history. Most NBFCs and digital lending platforms offer personal loans to new-to-credit customers or applicants having a poor credit profile or those having no income profile. However, since these applicants carry a high credit risk, they are usually eligible for lower loan amount, short term personal loans and higher interest rates.
Loan on Credit Cards
Modern lenders also offer pre-approved personal loans on credit cards to their select credit card holders in just a few seconds. You can get a loan within or above your credit card limit. These are instant loans and require zero documentation.
Easy Repayment Options
Personal loans can now be repaid through multiple online payment modes such as Standing Instructions, net banking, Electronic Clearing Service, etc. No cheque payments or visiting bank branch is required to make loan repayments now.
Conclusion
Thus we see, how digital lending platforms have brought a revolution in Indian lending system. Digital personal loans are easy, time saving, convenient, more accessible and have far more advantages over the traditional loans. It has also become easier to do the basic research before loan application. With recent transformations post COVID, many lenders have switched to completely digital lending. Digital personal loans have indeed transformed the face of lending firms.
