With the festive season round-the-corner, the e-commerce players have started offering heavy discounts on various merchandise products. Satyam Kumar, Co-founder & CEO, LoanTap told Aparajita Gupta in an interview how people can avail various short-term loans to avail those discounts.

With festive season round the corner, e-commerce players are all set to offer heavy discounts. What are the various lending options they have?

Festive season is round the corner starting with Raksha Bandhan and ending with Diwali in October. As the festive season will begin, we shall see families indulging in a shopping spree– right from buying clothes to household goods or personal consumption items -- and thereby, making the best of the season. Almost all retail stores and e-commerce players also gear up for this occasion. There are interesting and lucrative offers to attract prospective customers as well as to convert window shoppers to actual buyers.

However, a good financial approach during festive season is to do some expense planning beforehand. Instead of availing an EMI-based loan from retail or e-commerce store or converting your purchases to EMI or using your credit card conveniently, it is better to have a personal loan that helps you pay for your shopping and still stay planned.

With onset of digital NBFCs, accessing personal or need-based loans have become hassle-free. Also, the loans are now better suited to your pocket, with various customised options available, such as EMI Free Loans, Personal Overdraft or Advance Salary kind of loan.

EMI-Free Loan – In an EMI Free Loan, borrower services interest on monthly basis (for five months each) and pays a bullet amount towards principal outstanding every sixth month. Every time payment towards principal outstanding is made, the monthly interest repayment is recalculated. One can lower her instalment towards loan by up to 40 per cent with EMI Free Loans as compared to EMI based loans.

Personal Overdraft Loan - A line of credit facility wherein a borrower gets pre-approved loan but pays interest only when she withdraws. Interest is usually calculated on daily basis. This is a flexible loan and is like a credit card facility, but at half the interest rate of a credit card.

Salary Advance Loan – A short term loan that a salaried professional can take, for an amount up to 2.5x of their net salary, and for a short period of 3-12 months. This helps the borrower to become debt-free in shorter period. However, instalment has to be repaid through equal monthly instalments.

If a consumer has decided to go for a holiday or purchase a vehicle, there are specific loans such as holiday loans and premium bike loans that are available. Most of them come with their own unique advantage.

The repayment is done through EMIs, leading to zero outstanding by the end of the tenure. Advance salary loan gives more time for repayment, as compared to credit card. Thus, it helps in building financial discipline.

With freedom to choose the amount, flexible repayment options coupled with customised options – one can go for loans like Credit Card Takeover Loan and EMI Free Loan. Can you explain these types of loans?

EMI Free Loan is a customised Personal Loan in which borrower pays only interest on monthly basis (for five months each) and bullet payment towards outstanding principal amount every sixth month. This bullet payment amount is calculated by dividing loan amount by number of six month periods in loan tenure. After every bullet payment, outstanding principal loan amount reduces, which further reduces monthly interest outgo from next month. Hence, this loan helps lower monthly instalment up to 40 per cent as compared to EMI based regular Personal Loan.

Credit Card Takeover Loan is a Personal Loan for debt consolidation. It helps you pay all your pending credit card dues or multiple loan obligations at one go. Interest towards loan is paid on a monthly basis and therefore, repayment becomes manageable along with current cash flows.

It is always a financially prudent decision to swap credit availed at a high monthly interest rate with Personal Loan that can be availed at a lower monthly interest. Credit Card Takeover Loan helps in debt consolidation and helps you build better financial discipline, which in turn can positively impact your credit score.

What is the rate of interest charged by these types of loans?

Most of these loans are offered at 1.5--2.5 per cent monthly interest rate, on a reducing balance basis.