The advantages of applying for personal loans through fintech platforms

May 4, 2023 . Personal Loan . 10 min read

Personal loans are a popular way to access funds for various financial needs such as debt consolidation, home renovations, or unexpected expenses. While banks have been the traditional go-to option for personal loans, fintech platforms are quickly gaining popularity as a more efficient and convenient alternative. Fintech companies use technology to provide instant loans with minimal documentation, customisable solutions, and competitive interest rates.

In this blog, we will discuss the advantages of applying for personal loans through fintech platforms and how they can benefit borrowers.

An overview of fintech platform

A fintech platform is a financial technology service that provides financial solutions through advanced technology such as software, the internet, and mobile devices. These platforms offer a range of financial services such as online banking, mobile payments, investment management, and insurance.

One of the main advantages of fintech platforms is that they provide quick and efficient financial solutions to customers, with services such as instant personal loans that can be availed in minutes. They also use big data and artificial intelligence to analyse customer behaviour and preferences, providing tailored solutions for each individual.

How do fintech platforms provide personal loans?

Getting a personal loan from a fintech company is easy and straightforward, with the loan amount being disbursed based on the borrower’s credit score, income, and repayment capacity. While the exact process may differ depending on the lender, fintech platforms generally follow a similar approach that comprises two main steps.

1.    Approval process

By leveraging technology, Fintech lenders have enhanced the loan application procedure, resulting in increased speed and efficiency. The foundation of digital lending lies in the lender’s capability to utilise digital information for prompt, automated, and precise underwriting determinations.

Online lenders typically use alternative data sources such as social media, online activity, and other non-traditional sources to evaluate potential borrowers and make remote credit judgments quickly. This not only simplifies the loan application process but also ensures that borrowers can receive personalised loan solutions tailored to their specific needs.

2.    Payment and repayment process

Digital channels like online banking, e-commerce platforms, and mobile wallets are utilised by Fintech lenders to provide loans and collect repayments. This not only increases efficiency but also enhances security by creating a clear user history that reduces lending fraud.

Borrowers can also access their funds quickly and easily through these digital channels. Monthly repayments can be made through the same digital channel used for loan disbursement, and many fintech lenders offer an auto-debit feature known as E-NACH to ensure timely repayments, further simplifying the repayment process.

Benefits of obtaining a personal loan from a Fintech company

The popularity of personal loans from Fintech companies is on the rise, primarily due to their numerous advantages over conventional bank loans. Below are some benefits of obtaining a personal loan from a Fintech firm:

●      Instant loan disbursement

Fintech companies are known for their ability to provide quick and hassle-free personal loans. With their risk assessment algorithms, fintech lenders can assess your repayment capacity in a matter of minutes, based on factors such as your credit score, income, and other financial details. With minimal documentation required, fintech firms can disburse loans within as little as 5 minutes to 48 hours, making it an ideal choice for urgent financial requirements.

●      Online verification and approval

Unlike traditional banks that may require you to go through a tedious in-person verification process, fintech loan providers carry out the KYC (Know Your Customer) verification process online. You can simply upload your bank statements, employment proof, Adhaar, and address proof online, and their speedy algorithms will quickly verify your information. The acceptance or rejection letter is then automatically sent to you, so you can plan your next move accordingly.

●      Customisable loan solutions

While most banks have fixed personal loan eligibility criteria and repayment terms, fintech loan providers offer more customisable solutions. With a fintech firm, you can tailor the loan amount, loan term, and even the personal loan interest rates to suit your needs. This flexibility is particularly helpful if you have a unique financial situation or need a loan for a specific purpose.

●      Wide accessibility

Unlike some traditional banks that may have a limited list of verified employers and professions, fintech firms are generally more open to offering loans regardless of the applicant’s profession. If your credit score is in good standing, you can obtain a substantial credit limit at a low rate of interest for a personal loan.

●      Cost-effectiveness

Fintech companies usually offer attractive interest rates and may not charge any fees for prepayment or early settlement of your loan. This can help you save money and settle the loan faster, making the personal loan a more cost-effective option than traditional bank loans.

Conclusion

The emergence of fintech platforms has made it easier and more convenient for people to apply for personal loans. With instant loan approvals, online verification, customisable solutions, wider reach, and more cost-effective interest rates, fintech companies have disrupted the traditional banking system in a positive way. Whether you require a personal loan for home improvements, debt consolidation, or any other purpose, fintech platforms can offer a seamless borrowing experience.

If you require a personal loan for any home-related expenses, consider checking out HomeCapital. With loan amounts up to ₹ 15 lakhs and a hassle-free digital application process, HomeCapital can help you meet your financial requirements with ease. Visit HomeCapital’s website today to learn more and apply for your personal loan.