Types of Digital Loans Available | Online Loan Options
5 min read | 5 months ago
What Are the Types of Digital Loans that Are Available?
Are you looking for a loan but don't want to go through the hassle of traditional lending institutions? If so, you're not alone. More and more people are turning to digital loans for their convenience and flexibility. According to a survey, India has seen an annual growth of 39.5 per cent in digital lending over the past 10 years. This is a testament to how popular digital loans have become in India.
You must be wondering that there are traditional loans available, so why are digital loans becoming a more popular choice? Well, the answer is simple- Convenience. Digital loans are a type of loan that can be accessed and processed entirely through digital channels. This means you can apply for and receive a loan without ever leaving your home. So, it is not a big surprise that digital loans are the first pick for borrowers.
Digital loans offer the convenience that all borrowers want. But is that all there is to them? Read on to find out.
What are Digital Loans?
Digital loans are loans that are processed through online platforms/mediums, such as mobile apps or websites. You can avail them from public or private sector banks at an attractive interest rate. They are quick, and minimal documents are required as well. Not only this, funds are credited to your account post approval within hours.
How are Digital Loans Different From Traditional Loans?
Digital loans sound much like traditional loans, right? But in reality, digital loans differ from traditional loans in several ways. Firstly, the application process is completely digital, so you are not required to visit any physical location to apply for the credit. Secondly, digital loans require a very small documentation set. Normally, you must provide digital lenders only with your identification and proof of your income. In contrast, traditional loans require a lot of documentation, such as bank statements, tax returns, and employment verification.
But what if you have different needs? Do digital loans cater to varying requirements? Yes, they do. We'll tell you all about it.
Types of Digital Loans Available
There are several types of digital loans available, but we'll focus on two of the most popular ones.
- Digital Personal Loan
A digital personal loan is an instant loan that can be availed for financial emergencies. These loans are unsecured, so you needn't pledge any collateral. It also requires you to submit minimal documentation, and the loan approval is quick. Many banks and financial institutions offer these digital personal loans, ranging from well-known nationalised banks to established NBFCs. This loan is an ideal option for people who urgently need money and do not have the time or means to follow a lengthy process to get it. Plus, with interest rates starting at just 12% and loan amount eligibility up to Rs. 10 lakhs, these loans offer a great deal of benefits to you.
- Digital Business Loan
Digitalisation is making businesses smarter, and for such smart businesses, you need smart financial solutions like digital business loans. A digital business loan is a type of loan that is designed for MSMEs and start-ups. These loans are also unsecured, meaning you don't have to pledge any collateral to borrow as much as Rs. 30 lakhs. The documentation required for these loans is minimal, and the application process is straightforward. Digital business loans have a such as 15.75% and upwards, as offered by Unity Small Finance Bank. These loans are ideal for small business owners who need money to cover their operating expenses, pay for inventory, or invest in their business's growth.
How to Apply for a Digital Loan?
Applying for a digital loan is easy. Here are the steps you need to follow:
Step 1: Research your options - Look for banks and financial institutions that offer digital loans and compare their interest rates and repayment terms.
Step 2: Check your eligibility - Check whether you meet the eligibility criteria for the loan you want to apply for. This will usually include factors such as your age, income, and credit score.
Step 3: Fill out the application form - Once you've found a loan that you're eligible for, fill out the application form. This will usually require you to provide your personal and financial information, as well as your identification and proof of income.
Step 4: Wait for approval - After you've submitted your application, wait for the bank or financial institution to process it. This usually takes a few hours to a few days.
Step 5: Receive the funds - Once your loan is approved, the funds will be disbursed to your bank account. This usually happens within a few hours of approval.
Conclusion
In conclusion, we should say that digital loans are an easy and flexible way to get access to money whenever we need it. It is suitable for people who have no time or opportunity to wait for the bank's approval of the loan, as well as go to the bank regularly to complete the application process. So, if you are facing a cash crunch, don't worry as you can always rely on digital loans for all your needs.
FAQs
1. What is a digital personal loan?
A digital personal loan is an instant loan that can be applied for online and requires minimal documentation. It is perfect for emergency situations.
2. What is a digital business loan?
A digital business loan is a loan offered by online lending platforms that cater to small businesses. It is quick, hassle-free, and can be availed at competitive interest rates.
3. How are digital loans different from traditional loans?
Digital loans can be applied for and processed online, require minimal documentation, and offer quick disbursal. Traditional loans, on the other hand, involve lengthy paperwork and take longer to process.
About Unity Small Finance Bank
Unity Small Finance Bank is committed to making banking simpler and more accessible for everyone. Our services include Savings Account, NRI account, Current Account, Fixed Deposits, and Personal Loans offering flexible tenures and attractive interest rates. We also offer financing options like MSME Loans and Microfinance to support businesses and underserved communities. Learn more about Unity Small Finance Bank here.
