When everything -- from groceries to gadgets -- is available online, why should credit be far behind? However, are online loans a good option for you?
A sudden cash crunch can come unannounced in anyone’s life. At such times, all you need is quick and hassle-free access to credit. Armed with your smartphone, you set about looking for a quick credit option and before you know it you stumble upon scores of online platforms promising to dispense loans, each of which promise you approval in a few minutes, easy installments and convenient terms of repayment. But how do you know which is the best deal, or are online loans a good option in the first place or not? Let’s dig deeper to find some answers.
1. Easy online loan options
Firstly, when everything from groceries to gadgets are available online, why should credit be far behind? Thus, keeping in pace with the modern times, banks and other financial institutions have scores of online financial products that you can choose from. However, the trust factor comes into play while accessing credit online. If a personal loan is being backed by a trusted commercial bank in India, you can be assured of its credibility.
So, what are the advantages of accessing online loans? Here they are:
# Convenience: Needless to say, one of the top reasons to consider online loans is the convenience factor. Documentation in such loans is cut to a minimum. If you have the documents handy, you literally apply for a personal loan in a matter of minutes, by uploading the necessary documents. You can do so from the comfort of your home or office, without having the need to visit a bank branch.
# Quick turnaround: Online personal loans deliver on their primary USP of a quick turnaround. Not only do you get instant approval, the money comes into your savings account within a matter of a few hours. As a result, if you find yourself face to face with an emergency that requires you to cough up a certain amount immediately, an online loan can come to your rescue immediately.
2. Does your CIBIL score matter?
However, if all this sounds too good to be true, and you think that accessing credit online from banks is the easiest thing to do, hang in there just a bit, before you rush to make an application. As a borrower, you must be mindful of the fact that prospective lenders pay great attention to your CIBIL score while assessing your creditworthiness. Thus, if you have a low CIBIL score, your loan application may not be approved.
3. Atypical credit assessment
The other advantage of borrowing from such lenders is that they do not rely only on traditional parameters for lending and take other atypical parameters into consideration for lending. For instance, a P2P lender may consider your social media footprint from professional networking sites to assess your current career position and the prospects of advancing in your career.
Based on other such atypical parameters to assess your financial position, they arrive at how creditworthy you are. In such assessments, CIBIL score may be granted a lower importance whilst calculating your eligibility, based on the risk appetite of the lender.
That having said, it is prudent to maintain a good CIBIL score to get access to timely credit at competitive rates of interest. A good credit score is a measure of one’s financial health. Just like the upkeep of one’s physical health, with regular exercise and diet, the upkeep of one’s financial health is equally important with good credit habits.
(By Ajit Venugopalan, Managing Director, SVC Co-Operative Bank)