Dos and Don’ts to keep in mind before taking a loan from digital platforms

While a personal loan helps you brave various emergencies at times of financial crisis, futuristic fintech solutions on digital platforms make money lending and availing loan, a seamless process.

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The prevailing COVID-19 pandemic has brought the economy to its knees. The pandemic that commenced as a health hazard, has slowly transformed into a full-blown economic meltdown, owing to many layoffs and business losses. With the unemployment rate on the rise and salary reduction turning out to be the new normal, more and more people have started to face a financial crunch. At such a junction, emergency funds have become an imperative financial solution.

However, COVID restrictions have become an obstacle for people to get emergency loans from conventional sources such as banks and NBFCs (Non-Banking Financial Companies). In the wake of social distancing norms and fear of contracting the virus, people hesitate to visit these institutions in person thus making the digital platforms a hotspot for money lending practices. Having said that, the increasing risk of cyber fraud in the booming online loaning structure makes it vital for anyone to evaluate the dos and don’ts before considering online loans.

Do’s of applying for loans on digital platforms

Verify the credibility of the lender – Taking a loan is a significant financial decision because you plan about the repayment methods even before borrowing the money. Therefore, before applying or taking a loan from any source, it is crucial to first validate the lender’s credibility. Always make sure that the lender is verified by the Reserve Bank of India (RBI) and has a reliable lending history.

Read and understand the fine print – To make an informed decision, always read the fine print of terms & conditions, and privacy policy. Understand that these details that people often tend to overlook, cover all the important loan details including repayment schedule and charges. Remember, these tiny details may lead to an increased cost of borrowing if you pay late EMIs.

Research, evaluate, and then make an intelligent choice – Before choosing any lending option, make sure you compare interest rates, lending terms, loan tenure and repayment options. Select the lending option that is most suitable for your needs and financial situation.

Keep a good credit score – While many new-age fintech institutions may look beyond the credit score, it is still an integral part of the evaluation process. The creditworthiness of a borrower plays a critical role in the loan process. People with a good credit history or CIBIL (Credit Information Bureau (India) Limited) score have higher chances of getting their loan application approved.

Don’ts of applying for loans from digital platforms

Say, ‘No’ to unofficial sources – Increasing cyber traction has also accelerated the number of online fraudsters and cheaters. Stay vigilant of non-verified lending applications asking for confidential information such as an address, PIN, bank details and account number. Beware of such tactics and always verify your lending source before opting for a loan.

Abstain from taking multiple loans at one time – Taking multiple loans at once increases the probability of defaulting on the loans, which may affect the credit score and reduce the eligibility to take future loans. Instead, combine all your financial needs into one loan and further manage your finances.

Avoid physical contact; it might be an impostor – The agenda of the online loan structure is to make the lending process contactless, safe, convenient and hassle-free. So, if a company or an agent is asking you to hand over documents physically, it simply goes against the very structure of the online loaning system. Therefore, it is advisable to upload all the documents on the verified lending company account and not entertain any agent asking for physical contact.

Look beyond interest rates – Checking interest rates is an important part of the research plan. However, it is not everything. Look at things like pre-payment charges, processing fees and pre-closure charges, as they may make a marginal difference later. Remember, a personal loan is a short-term loan. In most cases, it is repaid in a maximum of five years. With time, your income may gradually increase. Thus, your pre-payment charges shouldn’t be too high in case you decide to pre-pay or pre-close the entire loan amount.


While a personal loan helps you brave various emergencies at times of financial crisis, futuristic fintech solutions on digital platforms make money lending and availing loan, a seamless process. However, in this fast-changing and continuously upgrading world that’s powered by technology, being mindful of the tips mentioned above may be crucial to achieving the best and safest possible deal for your loan.

by Anil Pinapala, Founder and CEO of Vivifi India Finance

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First published on: 14-07-2021 at 14:56 IST