Over the last decade, with the advent of advanced technologies, the world of finance has seen rapid growth in terms of ease & availability of finances for all sectors of society. As a result, our lives revolve around these financial instruments and the most common of all is a personal loan. It has become an inevitable part of our lives, as a quick tool to avail funds in case of an emergency or an urgent need.

With the covid-19 pandemic, over the last two years people had no option but to transact via digital mediums. For small ticket loans, many start-ups took it as an opportunity and came up with their lending platforms which were entirely digital and the process was comfortable. As it is an unsecured loan, people who suffer or went through a liquidity crisis, choose to opt for an instant personal loan which can easily be availed online without having to visit any branch or submit documents in person. However, this has lead to a steep increase in the number of online frauds who take advantage of someone’s misery and click bait users who are in dire need.

At Apnapaisa, we have curated a few pre-requisites which can enable a borrower to have a better understanding of the Do’s and Don’ts of availing an online personal loan from a digital-only lender. Let’s discuss it a little more;

 Credibility of the lender

More often than not, whenever we deal online there is always a chance that we do a thorough research via various sources to ensure the legitimacy of a product or a service. The same applies with a digital-only lender; a borrower must always ensure that they verify the facts & information being promised, also if there are any bad reviews or testimonials being reported by the earlier users. Additionally, check whether the lender is a licensed entity or a registered partner with a bank or an NBFC, as the licensing is mandated by the Reserve Bank of India for all such lenders.

Interest rate fluctuations

To provide an edge to the borrowers to save money whenever possible, in 2019 the Reserve bank came up with Repo Linked Lending Rate (RLLR) for all types of retail loans, wherein the rate of interest is flexible and changes in line with the central bank’s repo rate. As it gives an advantage to the borrower, many online lenders do not disclose the base rate and quote a rate which has a higher spread or margin. However, as these online lenders operate digitally and have less operational costs, a borrower must negotiate to get a lower rate of interest as compared to banks and NBFCs.

Terms & conditions

For most of the services that include a legal contract or agreement, there are always a set of terms & conditions that need to be fulfilled. While taking a loan from an online lender, a borrower must go through the intricacies of the agreement point by point, also ask for a clarity from the loan executive in case of any abnormality. At the same time, one must keep in mind that online lenders provide flexible repayment options to choose from as per need and convenience. For transactions, it is advised to not make payments to any individual account, and ensure that the account is registered under the name of a bank, an NBFC or a registered entity.

Customer support team

The customer support or service team acts as a bridge between the borrower and the lender and plays a very crucial role for digital-only lenders. The convenience of availing a loan online must be backed by a robust customer support techniques, which can really prove to be helpful to a borrower during the entire tenure i.e. from the time they apply for a loan and until the loan gets repaid. At the time of negotiating, a borrower must ask and ensure whether the lender provides continuous reminders for payments and updates regarding their loan account.

While a borrower makes sure that the checks mentioned above are taken care of, they can apply for an online loan if it’s urgent. If the borrower has a good credit score, there are chances that they will get the best deal available amongst other lenders. All they require to do is to ensure that they are dealing with a genuine partner or lender and the chances of getting conned are minimum or none.