Heritage Guide: Take a personal loan? Steps to keep in mind when applying online – Digital loan

Digital lending has become one of the hottest Fintech trends in recent years. It refers to the process of applying, paying and managing loans using digital media. Lenders are increasingly turning to digital data to help them make lending decisions and retain strategic customers. With advances in digital lending, the Fintech sector will also provide better services to the poor in a faster, more cost-effective and more attractive way, making it a very productive instrument.

Despite the fact that online personal loans are growing in popularity, many consumers still prefer traditional services. Personal loans obtained offline cannot be compared to the ease of personal loans obtained online. As a result, online personal loans are becoming increasingly popular with city workers. Due to the rapid expansion of the digital market in India, the majority of lenders are expanding their operations to other regions. This is why online personal loans are preferable to traditional personal loans, and they should become more common in the future. Mahesh Shukla, Founder and CEO of PayMe India, shares his knowledge on the steps to keep in mind when taking out personal loans online:-

• Evaluate Diligently – Despite the convenience of digital loans, it is essential to use them wisely to improve your financial situation rather than simply acquiring the products you want and then struggling to pay EMIs. Before applying for a loan, you should ask yourself, “How much do I need?” and “How much can I afford?”

• Check with NBFC partner and its RBI registration – To issue loans, almost all online lending applications work through a non-banking financial institution (NBFI). It is essential to be aware of the participating NBFC and double check the information on the RBI website.

• Read the terms in advance – Check if essential terms are stated in advance, such as interest rates, processing fees, prepayment charges/penalties, term, method of repayment, etc

• Beware of hidden fees – Properly examine how processing fees, prepayment penalties, foreclosure fees, GST and other expenses work. It is not necessary to mention all these costs in advance, so read the agreement carefully.

• Verify before sharing documents – During the physical KYC verification, ensure that the executive has the appropriate identification documents to prove the legitimacy of the lending institution. To prevent identity theft, do not reveal any important documents until verification is complete.

• Maintain a high credit score – In addition to your income, having a good credit score can help you get a personal loan online with the interest rate and term you want. This is because a low credit score indicates a poor repayment history, which makes banks reluctant to give you a loan. Therefore, it is essential to settle all your obligations and outstanding credit card payments before applying for a new loan.

Dos to remember when applying for a personal loan online, according to Mahesh Shukla

• Check the credibility of the lender – Before applying for or accepting a loan from any source, it is essential to check the credibility of the lender. Always check to determine if the lender has been approved by the Reserve Bank of India (RBI) and has a solid lending history.

• Read and understand the fine print – Before making a decision, always read the fine print of the terms and conditions, as well as the privacy policy.

• Investigate, Evaluate, Then Make an Informed Decision – Before choosing a loan option, compare interest rates, loan terms, loan terms and repayment options. Select the best financing plan for your needs and financial situation.

• Maintain a good credit score – A borrower’s creditworthiness is crucial in the loan process. People with a good credit history or a high CIBIL score are more likely to be approved for a loan.

Things to remember before taking out a personal loan online, suggested by Shukla

• Say “No” to unofficial sources – As the popularity of the Internet increases, so do the number of online cheaters and fraudsters. Keep an eye out for unverified loan applications that ask for personal information such as your address, PIN, bank account number, and account number.

• Avoid taking out multiple loans at once – Taking out multiple loans at once increases your risk of default, which can hurt your credit score and make it harder to get future loans.

• Look beyond interest rates – Interest rates are an important part of the research approach, but it’s not the only thing to think about. Prepayment fees, processing fees and pre-closing fees all need to be considered as they can make a small difference in the end.

“There is no doubt that there has been an increase in online fraud during the COVID-19 outbreak. However, taking out a personal loan online is a wise move because personal loans from online lenders are everything as safe as big bank loans as online loans A knowledgeable lender, whether online or offline, will usually assess your credit before processing your application, outline loan rates and terms, and ensure that the loan will not harm your finances,” he concluded.

(Disclaimer: Opinions/suggestions/advice expressed here in this article are investment experts only. Zee Business suggests its readers consult their investment advisors before making any financial decisions.)

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