Availing a loan from a digital lender? Consider these factors first

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August 03, 2021 4:08 PM

Before one chooses to apply for a gold loan digitally, it is important to conduct thorough research on the platforms available and verifying the credibility of the same.

personal loan, instant loan, instant loan providers, instant credit, loan apps, digital lending platform, Covid-19 pandemic, personal loan, personal loan interest rates, personal loan charges, personal loan eligibility, personal loan HDFC, personal loan SBI, loan offers, repayment capacity, credit scoreThe journey of the borrower, right from the first time they reach out to a platform till the time they have repaid their loan, can be a smooth one provided a good customer support mechanism is in place.

With the emergence of fintech startups and digitally-driven credit availing systems, loans have now become available with the click of a button, sitting at home. The dependence on digital mediums was further pushed during the lockdown.

Ankur Gupta, Founder and CEO, Ruptok Fintech, says, “With the pandemic, people had no option but to transact digitally, especially when it came to small loans with low ticket size. As digital credit availing continues to gain momentum, there are certain things that borrowers must know before they opt for a digital loan.”

Here are some factors to consider before taking a gold loan or personal loan from digital lenders:

Checking for the platform’s credibility: Before one chooses to apply for a gold loan digitally, it is important to conduct thorough research on the platforms available and verifying the credibility of the same.

Gupta says, “The best way to do so is to check for the digital presence of the platform in terms of a credible application/ website, customer testimonials and reviews.” Additionally, one can also check if the platform is a verified lender registered with the Reserve Bank of India or a partner associated with a verified bank.

Type of loan: Before taking any loan, it is important to understand the different types of loans available in the market and which loan will suit the borrower’s requirements best. Start by creating a checklist – will it be a short-term or a long-term loan? How much could be the collateral? What are the payment options available? What could be the possible time of loan disbursement? Experts say it is important to have convincing answers to these questions before signing up for a loan.

Interest Rates: Even though this is an important point, experts say this should not be the only factor while taking a loan. However, a borrower needs to check the interest rates before applying for a loan.

Gupta says, “A borrower must understand the latest market scenarios and fluctuations in these rates. Even though interest rates vary from one platform to another, gold loans usually have low-interest rates, when compared to any other type of loan. When availed digitally, these interest rates may even be lower due to less operational costs involved from the lender’s end.”

Understanding the Scheme: After finalizing a scheme, it is of paramount importance to go through each clause/condition placed in the agreement to be signed. Experts say, ideally, a good digital lending platform will thoroughly communicate all details on the loan with the help of a dedicated loan executive. However, borrowers must also still have complete knowledge of the scheme that they are choosing.

Gupta adds, “When it comes to gold loans, there are two major schemes available with banks – fixed and jumping interest schemes. Platforms or NBFCs may also come up with customized, tailor-made schemes to suit the needs of the borrower or to attract more customers.”

Understanding the payment mechanism and options: When it comes to branchless online lending platforms, they often have flexible repayment schemes and options available. A borrower can choose an option depending on their needs.

Industry experts say, when it comes to payments, it is important to note that a borrower must only make transactions to the official accounts registered under the NBFC/Bank/ Partner platform’s name. Payments must never be made under a loan executive’s name. Online payments are deemed to be safe by most banks since the payments made are traceable as they can be tracked.

CRM Support: Experts say the convenience of a digitally availed loan must further be aided by a robust and real-time customer service mechanism. Note that receiving reminders on interest payments via emails and SMSs is an important way in which good digital lenders ensure communication.

Gupta of Ruptok Fintech adds, “The journey of the borrower, right from the first time they reach out to a platform till the time they have repaid their loan, can be a smooth one provided a good customer support mechanism is in place.”

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