Lending apps disrupt digital in the financial space

Instant personal loan through apps has grown, bringing a whole new borrowing experience

Tired of applying for personal loans, but no luck? Did you take a pay cut this month?

Whatever the reason, more and more people of all ages are turning to instant loan applications these days for their urgent need to finance their personal expenses. Digital lending is a reality that is rapidly transforming the credit scene in India. All you need is a smartphone and a working internet connection to download the app.

Good or bad, it revolutionized the fintech industry by making borrowing easier than ever.

Lending from apps started in 2019 and since then the issue has made headlines several times with loan frauds, racketeering, the RBI raising red flags and the removal of lending apps from. Google Play Store. However, with the RBI set to create a task force to monitor the aspect of digital lending and some apps getting NBFC approval, things are indeed looking brighter.

Let’s see what these loan applications are from the perspective of an average Indian boy. Sameer finds himself with cash in hand after settling his monthly expenses and savings. When an unforeseen situation arose, he found himself helpless. He was refused a personal loan from a few traditional banks because of his bond / fixed income ratio. He had the only option to apply for a loan with his credit card, but he didn’t think about it due to the higher interest rates. At 30, he was reluctant to borrow from friends or relatives.

Instant loan applications caught his attention at this point. He spotted an advertisement on a social media platform that promised the loan would be disbursed in just an hour without any proof of income. He immediately installed the app, filled out his basic information, downloaded his KYC, and was approved for a line of credit. He was free to borrow any amount on this line of credit for a certain period. It was a sigh of relief.

Loan approval through these apps is much faster compared to the traditional loan process through physical banks. The whole process is hassle free compared to the existing system. And, the experience is fluid.

Sameer didn’t have to face a problem and the trip went smoothly. But many like Sameer have suffered as the apps secure access to almost all of the borrower’s details from the phone, including the contact list, photo gallery, and messages. In the event of default, they use this access to send threat messages and also lay a debt trap for the borrower, pushing him from loan to loan to pay off the first one, and so on.

Let’s take a look at the different features of instant loan apps.

● Get short term loans ranging from 1 month to 5 years (depending on the application).

● The line of credit can be anywhere between Rs. 9,000 and Rs 5 lakh (based on application).

● Can be easily applied in the comfort of your home or workplace.

● Paperless loan application that can be approved in as little as 4 minutes.

● Pocket EMI with an appropriate term to choose from.

● Instant approvals and disbursements with the freedom to access the line of credit at your convenience.

Instant loan apps do not have a strict lending policy with respect to banks and hence, they are friendly for borrowers, especially for those applying for small loans. Minimal documentation and e-KYC facilitate quick loan approval and disbursement, saving the borrower a lot of time.

Unlike traditional lenders, instant loan apps use your “social value” which helps them analyze your credit profile and on that basis they can approve a line of credit quickly. This eliminates longer appraisal periods based on analyzing your credit score, loan history, tax returns, etc.

Despite the frauds and scams, the instant loan app industry is still in its infancy and needs a lot of credibility to gain the trust of consumers. But it is clear that it is a digital revolution that is shaking up the world of personal loans. Good or bad, instant loan apps are the fintech players that have changed the lending process.

The author is a technology columnist

DISCLAIMER: Opinions expressed are those of the author and Outlook Money does not necessarily endorse them. Outlook Money will not be liable for any damages caused to any person / organization directly or indirectly.

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