Fintech lenders have become immensely popular players in a largely competitive lending market. While private banks still have their footing in place, Fintechs have bettered them on many fronts. If you are thinking of taking out an online loan from a Fintech lender, there are certain things that you should know. Let’s look at these essential points to note while taking out an online personal loan from a Fintech. While we’re at it, let’s also look at some important features associated with Fintech lenders in the present day.
The entire process can be completed online
Perhaps the best thing about taking out a personal loan from a Fintech lender is that the entire loan application process can be completed online. Most Fintechs have advanced processes that require minimal documentation. Moreover, with the emergence of e-KYC, hard copies of documents aren’t really required. While this is true, most lenders that have adopted minimal paperwork prefer visiting the borrower and collecting hard copies of KYC documents – purely for verification purposes. In cases where an applicant has an impeccable credit record, physical paperwork isn’t quite needed. As such, barring minimal physical paperwork involving KYC documents, all other documents can be uploaded online.
Expect the rate of interest to be slightly higher
Fintechs offer affordable and competitive interest rates on loan applications, but the rates are a tad bit higher than the rates offered by private banks or traditional lenders. While this is true in the case of most Fintechs, note that the interest rate offered by Fintechs always higher than rates offered by traditional lenders. Fintech lenders also adopt risk-based pricing models. So as an applicant, if your credit score is up there and your credit profile is clean, you can expect to get a low interest rate on your loan application.
Disbursals happen faster than in the case of private banks
Loan disbursals in the case of Fintechs happen within 24-48 hours, unlike the turnaround time taken by private lenders. Private Banks take at least 7 business days to process and disburse personal loan applications. While almost all lenders including private banks allow applicants to complete the application process online, the process in the case of private banks involves slightly more paperwork. Owing to advanced systems, Fintechs these days are able to process loan applications much faster than traditional lenders.
You can receive instant loan approval
When you apply for an online loan with a Fintech lender, you can receive instant loan approval if your credit profile is in line with the internal credit norms of the lender. Advanced risk-assessment algorithms enable information on your credit profile to be obtained almost instantly from the credit bureau, and post analysis, you can receive instant approval. Once you receive initial approval, all you’ve got to do is upload your loan documents and receive your loan amount within 24-48 hours. Note that if your credit health and parameters in your credit profile do not meet the lender’s criteria, your application will face rejection.