Personal loans have emerged as one of the most realistic, accessible, and inexpensive financial instruments. These debt services are available from banks, non-banking financial companies (NBFCs), and fintech companies. Fintechs, on the other hand, have increased in popularity in recent years. They’ve been one of the most popular ways to get a personal loan. So why is this the case? Let’s take this one at a time to better understand that FinTechs are preferred over banks.
What is a FinTech?
FinTech – As the name implies, it is the technological innovation to all aspects of the lending process. Fintechs also reduced the number of touchpoints in the personal loan process by making it paperless and contactless from application to payment.
The partnership between finance and technology has aided in the acceleration of processes with technology-driven solutions that speed up the process by a factor of ten, making credit available to those who need it most and where they need it most. Processes have improved not only in terms of smoothness, but also in terms of turnaround time, improving the overall customer experience.
Let’s understand further how fintechs have made borrowing more feasible –
What are the benefits of choosing a FinTech for Personal loan?
The inclusion of technology in lending processes has proven to deliver a highly successful lending model. Below listed are the benefits of borrowing through this model –
Fintechs also allowed you to apply for a personal loan from the comfort of home. What you need is a smartphone and access to the internet. For your borrowing needs, there are a range of digital lenders to choose from. Furthermore, these lenders’ verifications do not require you to attend any institution. It would all be done at your doorstep.
From the application to the payment, anything can be done online or via the lender’s personal loan app. You simply fill out the application form, include the required information, and upload the required documents, and you’re finished! All you have to do now is sit back and wait for your payment.
Fueled with flexibility
FinTechs offer a lot of flexibility to the lending platforms with their creative personal loans. Borrowers can now select from a variety of different repayment choices thanks to digital lenders. Which allows borrowers to choose the right repayment plan for their monthly budgets and cash flow periods. It increases the affordability of your personal loan.
FinTech companies have brought innovation to a previously unremarkable segment of the personal loan sector. Loan for personal use EMI-Free Loans, Travel Loans, Wedding Loans, Rental Deposit Loans, and Overdraft Facilities are examples of thoughtfully designed packages to satisfy borrowers’ various requirements.
Better turnaround time
Fintechs also created interfaces and proprietary algorithms to simplify much of the procedures, such as eligibility checks, verifications, and credit reviews, by using technology to its maximum potential. This reduces the need for human interaction, saving time and allowing funds to be sent to borrowers quickly. It is possible to gain access to funds in as little as 24 hours!
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Eligibility Checklist for Instant Loans from Fintechs
The following are the general eligibility criteria for individuals seeking instant loans from fintechs:
Age: Borrowers must be above the age of 23 to use any fintech companies that offer personal loans. In most cases, the upper age limit is set at 55 years old.
Income requirement: To be eligible for instant loans, most fintech lenders expect borrowers to have a certain amount of income. Most companies expect creditors to make at least Rs.15,000 a month on average.
Employment: When deciding your eligibility for an instant loan, fintech lenders often consider your employment record. To apply for an instant loan, most companies require applicants to have been working for at least two years.
Documents required: When you apply for an instant loan with a fintech company, you will have to submit a few documents such as your PAN card, Aadhaar card, your payslips for the past three months or salary statements, bank statements for the past three months, photographs, etc.
Credit score: Your credit score is one of the most important considerations fintechs regard when deciding your eligibility for an instant loan. To be approved for an instant loan, most lenders expect applicants to have a credit score of at least 700.
Repayment history: Apart from your credit score, fintech lenders also look at your repayment history when determining your eligibility for an instant loan. Good repayment history will make it very easy for you to qualify for a loan at favourable terms.
How are Fintech Companies Different from a Bank?
Fintechs have captured the unexplored market of banking and finance with leading edge innovations. One of the most innovative ways to make life easier for youngsters is to provide services via instant loan apps. Traditional banks are also depended upon by some to satisfy their debt obligations. However, in the tough competition from fintech companies, banks are welcoming technological advances to reach out to their customers through online banking and smartphone apps. Let’s look at the differences between these two services:
Traditional banks serve a wider audience’s specific financial needs. They mostly concentrate on products and customers that have developed over time. Their vision, meaning, and goal have existed for far too long for them to suddenly change. It was never in the banks’ plans to provide their customers simplified credit products with an instant loan app.
The term “fintech” has traditionally been associated with startups. These were created to fill the gap between what existing institutes offered and the changing needs of consumers. Their goal is to use technology to develop a variety of creative products that will appeal to people of various economic classes.
Customization and Personalization
Traditional banks are more concerned with providing the essential financial services that keep the economy going smoothly. The selection of products was limited, and the policies were strict. All is usually done by a process, with no customization. Customers have no choice but to focus on pre-designed packages to meet their financial needs.
Fintech companies used advanced technology to research consumer preferences to provide them with personalised solutions to meet their needs since they first entered the industry. They given priority the customer’s needs and developed a highly personalised service method that enables for fast and easy flexibility.
Traditional banks’ contact with customers has been limited to chatbots as they become more tech advanced. They haven’t been able to make significant improvements in the user experience since expanding their line of products. It is very difficult to change a decades-old infrastructure, and the process is taking place gradually.
The financial sector has designed its infrastructure to be user-friendly and customizable. Round-the-clock service, simple accessibility, instant loan approval, and quick disbursals are all examples of innovation. Fintechs have been able to deliver those interactions on a variety of personal loan applications thanks to technological advancements. Customers will get comprehensive solutions at the touch of a finger, which makes for a better user experience.
There is no doubt that the future of fintech is promising in today’s market. Although faced with far fewer organizational structure barriers, the fintech sector will have to keep floating innovative ideas and products to keep up with the changing markets.
Apply for Loan in a Minute !
Fintechs have developed a strong reputation in the banking industry. If you are looking for an instant loan, consider taking one through a fintech as the eligibility criteria are easier to meet and the terms can also be far better than those offered by conventional banks and financial institutions.
Because of the symbiotic loan model that helps both borrowers and lenders. It is the best choice to take out a personal loan from one of these institutions, especially for aspiring millennials who like things that are quick and easy.