How Technology has Changed the Way We Apply for a Personal Loan?

Over the last ten years, the advancement of web technologies has been a boon for the financial sector and its service delivery mechanism. It has completely revolutionised the way we transact and save money.

Not only for users, but the internet has enabled financial institutions to expand their footprints and offer greater access to various financial products. For example, ten years ago, availing a personal loan was considered to be a mammoth task by users, as it involved heavy legwork in identifying financial institutions that offer a personal loan, and then meet the stringent eligibility criteria.

But, now it is a thing of the past. With technological advancements giving rise to online personal loans, and an array of free tools & calculators at the disposal of users, applying for a personal loan has become very easy.

Let’s have a look, how technology has changed the way we apply for a personal loan.

1. Finding and Comparing Suitable Lenders has Become Easier

Compared to earlier days, applying for a personal loan has become much easier. The RBI’s decision to allow NBFCs to operate in the retail lending space has resulted in many new players offering similar loan products, flooding borrowers with choice.

Through the internet, you can compare and get access to information like personal loan interest rates, eligibility criteria, maximum loan amount limit, etc., very easily. Therefore, you can make an informed choice that best suits your needs.

2. Online Personal Loan Application

Gone are the days, when you had to visit a bank branch in person to apply for a personal loan and negotiate with the lender on interest rates and repayment tenure.

Now, you can apply for a personal loan online at the comfort of your home. All the subsequent processes involved, from verification to approval are completed online leveraging technology. You need to upload all the key KYC documents like PAN Card, AADHAR Card, income proof, bank account statement, and other mandatory documents, which will be verified by the lender upon receipt of your application and in-principal approval based on eligibility.

This makes the whole process convenient and paperless for borrowers, and even for lenders, as it is easier to keep track of all developments.

3. Free Online Tools and Calculator

Using free online tools and calculators such as the personal loan EMI calculator and personal loan eligibility criteria calculator, you can now easily estimate your personal loan EMI and the maximum amount you can borrow as per a few basic criteria.

This makes the whole process a lot more convenient and transparent for the borrowers. Using the EMI calculator, you can know the EMI amount of different repayment tenures and then arrive at a suitable tenure so that the resulting EMIs are affordable as per your budget.

The EMI calculator also provides you with an amortization schedule, which is a detailed presentation and breakup of EMIs (principal and interest component) of the chosen loan tenure.

Must Read: How To Choose The Best Personal Loan For You?

3. Quicker Loan Approval

As lenders get quick access to borrowers’ credit reports from credit information companies (CIBIL), it becomes easier for lenders to approve personal loans for eligible borrowers. Moreover, since PAN and Aadhaar cards are linked to mobile numbers and bank accounts for most applicants these days, the lender’s verification process speeds up considerably.

Technology helps to weed out time-consuming processes like manual verification of documents, safe storage of documents, physical verification, etc. Also, there is a huge reduction in chances of error, as all the details are filled by the borrowers on the platform and are verified digitally by the lender. 

With greater efficiencies in all the processes, it results in quicker personal loan approval and superior customer experience.

4. Flexible Loan terms and Interactive Customer Support

Online digital platforms let borrowers customize their loan as per their specific requirements, like principal amount, repayment tenure, repayment options, etc.

For example, you can select between offline and online modes for loan repayment. Many borrowers are encouraged to choose between auto debit via ECS (electronic clearing system), UPI, debit cards and net banking for online repayment of EMIs.

In fact, with online digital platforms, you can easily manage your personal loan by accessing the dashboard, where you can check how much loan amount is repaid, outstanding loan amount, etc. You can resolve your queries online without the need to visit the lender’s office.

5. Proactive Risk-management

With technology, it has become easier to do a real-time assessment of risk-management of borrowers, which helps to reduce the chances of default and losses. 

On detection of default or multiple late payments of EMIs, lenders can assist you in making time for loan repayments and restructuring of the loan with eased terms and conditions. 

Also, it helps to improve security measures to stop any fraudulent activities and a more secure lending process.

Conclusion

Technology has changed the face of financial lending for good. From multi-device support for online transactions to online tools and calculators, technology has enabled faster loan application, decisions, transparency, and proactive risk management.

The overall benefits- greater access to financial lending by users, user-friendly experiences, saving time, and the build-up of a trustworthy system and processes.