WITH the economy going cashless, banks and retailers have adopted ways to carry out paperless operations. A takeaway from such an attempt is the boon of paperless transactions which do not just include sending and receiving funds, but also accessing loans with a few clicks. Digital personal loans do not require human intervention and can be accessed remotely within a few minutes without the hassles of paperwork.
How does it work?
In order to avail a paperless personal loan, one needs to fill out a loan application form on the bank website and submit soft copies of the required documents either directly through the bank’s website or an affiliated financial marketplace. On submission of the relevant documents, the bank decides on the approval and loan limit and the amount is then credited to the borrower’s account.
How is it different from pre-approved loans?
Pre-approved loans have been there for a while now and are offered almost instantly as they are pre-approved based on the profile of the applicant. For instance, a leading private bank offers a 10-second paperless instant loan plan for its existing customers.
Banks offer such loans on examining the personal profile, financial credentials and credit report of existing customers. To apply for a pre-approved personal loan, one needs to log in to the bank account either through net-banking or mobile banking and click on the pre-approved loan option.
Paperless loans on the other hand are not pre-approved. The loan application is approved on uploading of the required documents online.
Before opting for a paperless personal loan
Have a repayment plan: Be it a traditional personal loan or a paperless one, the interest rate is relatively high compared to other loans. With digitisation of loans, seeking a personal loan has become easy. However, the onus of repayment still lies with the borrower. Ensure you have a repayment plan in place before opting for a personal loan.
Don’t ignore the terms and conditions of the loan: There are always clauses associated with such loans and they vary from bank to bank. Make sure you go through the terms and conditions so that you don’t miss out on any relevant notifications or clauses regarding service charges, etc.
Don’t forget to compare: Before you decide on a loan, do compare with the loans offered by other banks. The ease of getting a paperless personal loan may cause you to overlook other options available in the market.
The writer is CEO, BankBazaar