The fintech sector has made the loan process easier, faster, and simpler, by replacing the tedious financial practices of traditional financial institutions with technology intelligence, sophisticated algorithms, intricate analytics, and machine learning.

Simple online application for loans, no collateral requirement and funds disbursal in less than a week dramatically improved access to funds. System driven processes not only increased transparency and convenience but also made it viable to offer loans ranging from as low as Rs 2 lakh to as high as Rs 50 lakh with tenures as short as a few months.

India is among the world’s fastest growing fintech markets. The county’s fintech adoption rate stood at 87 per cent, as of March 2020, versus the global average of 64 per cent, according to a report published by Research and Markets. Estimating the Indian fintech market at around Rs1,920.16 billion in 2019, the report said this is expected to reach Rs 6,207.41 billion by 2025.

Advantages of online loan applications

Online loan applications make financing just a click or swipe away. Its top benefits include:

Anytime, Anywhere: You can access such loans 24/7, from any device that is connected to the internet and from any location.

Affordability: Online loans are easy and quick to access and offer to finance to businesses at competitive interest rates.

Flexibility: Businesses and individuals can access the amount they need and repay the loan at their convenience. Digital lenders also offer prepayment and part payment options to borrowers which makes digital loans convenient and flexible.

Access to unsecured loans: In most cases, there is no need for collateral to avail such loans.

Easy eligibility criteria: You can qualify for such loans without having to meet stringent eligibility criteria.

Smaller loan amounts: Businesses can access loans as low as Rs 1 lakh to purchase inventory, invest in equipment or pay vendors or salaries.

Steps to apply for a loan online

Applying for a loan today can be very easy, just a few simple steps and you could have the amount disbursed within 72 hours.

Step 1: Choose the right loan for you

Don’t get swayed by claims of the lowest interest rate or easy repayment terms. Compare interest rates and read the fine print. Being aware of the terms of the loan can help you make an informed decision. You can easily find all the necessary information online.

Look for the various fees and other charges that the lender will levy. Almost every type of loan is associated with charges such as processing fee, service tax, late payment charges, and more. The processing fee is usually about 1 per cent to 3 per cent of the loan amount. Additional charges such as arrangement fees and handling charges may apply. These can considerably increase your cost of getting a loan.

Check whether there are any charges for either partial or full payment of the loan amount before the end of the tenure. If you can pre-pay the loan amount, you could save on interest payments, lowering your overall debt burden.

Step 2: Use an EMI calculator to make an informed decision

An online EMI calculator is an immensely useful tool in understanding the monthly repayment amount, the repayment tenure and the loan amount that you can afford to repay. It can also help you determine whether you are eligible for a specific loan amount, based on your monthly salary or cash flow.

Step 3: Collate your documents

Apart from the loan application form, there are some essential documents you will need to submit to complete the KYC process. For personal loans, these documents include:

• Income proof, in the form of salary slips, income tax returns, Form 16, bank statements

• Age proof (passport, birth certificate, Aadhaar card, Voter ID card, or PAN card.)

• Address proof (Aadhaar card, electricity bill, passport, ration card, or telephone bill.)

• Photo identification proof (Aadhaar card, PAN card, voter ID, passport, or driver’s license.)

• PAN card.

For business loans, some additional documents may be required, such as:

• Business continuity proof, such as shop and establishment certificate/ tax registrations -VAT/Service tax/GST registrations.

• Ownership proof such as electricity bill/agreement copy/maintenance bill, with share certificate / municipal tax bill.

• CIBIL score - a minimum CIBIL score of 690+ is preferred for loan approval.

Step 4: Fill the Application Form

• Visit the lender’s website

• Go to the page for the type of loan you require

• Click on “Apply Now”

• Fill the form with the required personal details, such as full name, date of birth, contact details, etc.

• Submit the application form.

Step 5: Instant Loan Approval

With advances in fintech, you might need to wait just 5-10 minutes to get a response from the lender. Once the verification is done and you are informed of approval, the loan amount will be disbursed within a maximum of 72 hours.

Conclusion

The Indian financial sector has evolved significantly in recent years. It is heartening to see how easy accessing financial services has become.

Technological advancements have truly negated geographical barriers to financial services while offering facilities such as tracking of loan applications, reminders for EMI due dates, and much more.

The author is Chief Sales Officer at Capital Float

DISCLAIMER: Views expressed are the author's own. Outlook Money does not necessarily subscribe to them. Outlook Money shall not be responsible for any damage caused to any person/organisation directly or indirectly.