Tips on Taking Digital Loans from Genuine Lenders
5 min read | 2 months ago
In today’s Internet era, borrowing money is easier and more convenient than ever. Online digital loans are processed entirely digitally and do not require any physical documents. Additionally, they are generally quicker and more accessible since they do not require any physical documents, and the entire process is digitised.
Digital loans are undoubtedly convenient. Nonetheless, it is still a new entity in the loan industry. Let us look at what digital loans are and some of their key aspects.
But, first let us tell you about the digital loans available in the market.
Types of Digital Loans
Digital loans can be broadly categorised into two types - personal loans and business loans.
Personal Digital Loans
A digital personal loan is a loan you can take for any personal purpose. Whether you want to pay your medical bills or renovate your home, this loan is intended to help you. The loan is not secured, meaning you do not have to provide any collateral to take it. The amount of the loan, its tenure and interest rate depend on the lender and your credit score. Most banks like Unity Small Finance Bank offer up to Rs. 5 Lakhs at an interest rate of 16% and onwards.
Digital Business Loans
Your credit score is one of the most important factors that lenders will consider when deciding whether or not to approve your loan application. So, make sure to check your credit score ahead of time. A high credit score increases the likelihood of approval and can help you secure a lower interest rate. In most banks, a CIBIL score of 780 is considered a good score. A lower score may still allow you to get a loan but likely with a higher interest rate.
Where can you find Digital Loans
Several digital lending services provide digital loans in India. Digital loans are available on a variety of online lending platforms and mobile apps. They provide an easy and quick loan application process, and you can receive the loan amount to your bank account in just a few hours. But be aware, not all lenders are genuine and might charge hidden fees or engage in unfair lending practices.
Tips on Responsible Borrowing
While digital loans can be a convenient way to borrow money, it is important to borrow responsibly. Here are some tips to keep in mind:
Borrow only what you need and can afford to repay.
Do not take multiple loans at the same time.
Ensure that you have a steady income source to repay the loan.
Have a repayment plan in place before taking the loan.
Avoid borrowing from unregistered lenders or lenders with a poor reputation.
How to Select a Genuine Lender
While digital loans are convenient and quick, it is important to select a genuine lender to avoid falling into a debt trap. Here are some factors to consider while selecting a lender:
Regulatory Compliance: Ensure that the lender is registered with the Reserve Bank of India (RBI) to provide digital loans. RBI has mandated that all digital lending platforms and mobile apps must be registered with them to ensure they follow ethical practices.
Lender Reputation: Check the lender's reputation by reading reviews and feedback from other borrowers. You can find these reviews on various online forums and social media platforms. Avoid lenders with a history of charging hidden fees, high-interest rates, or harassing borrowers.
Digital Security: Ensure that the lender follows adequate digital security practices to protect your personal and financial information. Look for lenders that use encryption technology to safeguard your data.
Loan Terms and Conditions: Read the lender's terms and conditions carefully before taking a loan. Ensure that the loan amount, tenure, and interest rate are reasonable and that there are no hidden charges. Also, make sure that you understand the repayment schedule and the consequences of defaulting on the loan.
Conclusion
Digital loans are convenient and quick, but it is important to select a genuine lender and borrow responsibly to avoid any financial troubles. Always do your research before selecting a lender, and ensure that they are registered with the RBI, have a good reputation, follow proper digital security practices, and have reasonable loan terms and conditions. Remember, digital loans can be a lifesaver in times of financial emergencies, but they can also put you in a financial mess if you do not borrow responsibly.
FAQs
1. What are digital loans?
Digital loans are loans that are applied for, processed, and disbursed entirely online, without the need for any physical documents or visits to a bank or lender.
2. What are the common eligibility criteria for digital loans?
The eligibility criteria for digital loans vary from lender to lender but usually include factors such as age, credit score, income, employment status, and citizenship.
3. What are the risks involved in taking digital loans?
The main risks involved in taking digital loans include high interest rates, hidden fees and charges, data privacy and security concerns, and the possibility of falling into a debt trap if not repaid on time. It's important to thoroughly research and understand the terms and conditions before borrowing.
4. How can I ensure I'm borrowing from a genuine lender?
Ensure that the lender is registered with relevant authorities, has a physical address, reviews and ratings from other borrowers, and transparent loan terms and conditions.
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.
