Check out these factors before getting a loan from digital lenders
In this pandemic, people are applying for loans from digital platforms because of the quicker credit underwriting process and loan approval procedures available here. Although getting credit has become swifter and simpler, there are some factors that you must check as a borrower beforehand. It can prevent you from getting trapped in unfair loan terms. Therefore, it is crucial to do proper research before applying for a loan from digital lending platforms.
You must follow this checklist before applying for a loan from digital lenders
● Ensure that the digital lending platform is a credible institution: You must check the credibility of the digital lender before applying for a loan. If you are looking for credit on a mobile platform, select only those applications that follow the rules and guidelines of the respective app store. Even on the web, the digital lender must be registered under the Reserve Bank of India or as a verified lending partner of a legal bank. You can also research them online, and get feedback about their loan details and policies from previous or current customers.
● Choose the type of loan beforehand: Various types of loans can be available under a digital lender. As a borrower, it is your responsibility to learn about the different loans in detail and choose one that suits your needs the best. The credit underwriting process may require additional information depending on the type of loan the borrower is applying for. Here are some loan details that you must check beforehand:
- The duration of the loan.
- Does it need some sort of collateral?
- The different payment choices provided.
- The loan disbursement time.
● Check the interest rates provided by the digital lender: The interest rates provided by the digital lender depend upon the credit score and other financial information that the borrower provides. If the loan applicant has a high credit score, they receive lower interest rates compared to those who have poorer credit scores. Moreover, the interest rates can also vary depending upon the loan the borrower takes out. The borrower must have a clear idea of this topic. A digital loan generally has lower interest rates because the digital procedures make the operational costs lower.
● Understand the loan scheme properly: Although one can quickly get a loan from a digital lender, they should properly read the details, rules, and clauses mentioned in the loan document. Most digital lending platforms appoint a loan executive when an interested applicant reaches out to them for a loan. The dedicated personnel clarifies all the points of the loan agreement to the borrower. After learning the complete information from the loan executive, the borrower can decide whether the loan is suitable for them or not.
● Ensure that the digital lender provides proper customer support: The relationship between the digital lender and borrower does not end after the approval of the digital loan. There should be a proper support staff and service mechanism available to the borrowing customers. The customer service can send alerts and reminders to the borrowers before the due date of their loan payment arrives. Moreover, the loan applicant can also call the customer support service if they have any queries. A good digital lender ensures that the loan applicant has a complete streamlined course, from applying for a digital loan to paying it off entirely.
Having appropriate knowledge about these factors becomes crucial for a borrower when they are choosing a digital lender to apply for a loan. These checkpoints help them to choose a credible digital lending institution.
