Why You Should Choose A Loan App Instead Of Traditional Lenders

A personal loan makes it easier to fulfil dreams, and even pay for urgent needs. It offers a quick infusion of cash when you need it the most. But should you take it from your bank or from an online loan app?

Whom do you take the personal loan from?

All lending institutions in India, such as banks, NBFCs and lending apps, are empowered to offer personal loans to customers. However, the application and disbursal process are not equally smooth across these entities. If you are considering taking a personal loan but are unsure about whether to approach your bank or get it from a lending app, you should choose the latter. Here’s why loan apps are better than traditional lenders:

• Faster and better for an emergency: An

online loan app is certainly faster than a traditional lender like a bank in terms of processing times. All you have to do with the loan app is install it on your phone and upload your documents for your application. After this, the app checks your credit score (CIBIL, Equifax and its own AI-backed algorithms to arrive at a financial snapshot), repayment history and documents. But despite this thorough vetting, the app does not take days to process your instant personal loan application. You can apply online and get the loan disbursed in a day. Contrast this with a lender like a bank, that asks you to submit your paperwork at the branch office and takes a few days to process and disburse the loan. Delays are the last thing you want during an emergency, hence an app is always a better option for taking a personal loan.

• More flexible in its terms: Loan apps are much more flexible about approving the

instant personal loan, and also offering solutions to customers, than traditional lenders. For one thing, leading apps have a variety of credit score checks that they put into place: they do not depend only on the CIBIL score, but also have their own AI-backed algorithms to assess your financial behaviour and arrive at a more intuitive credit score – lenders like banks only check the CIBIL score and nothing else. Another point where apps score over traditional lenders is in the approval stage. If the app is convinced that your application is not up to scratch for a low credit score or incorrect documentation, then the same is immediately conveyed to you without delay. However, leading online loan apps allow you to reapply with a better credit score in just three months – most banks make you wait for 3 months before you can reapply to them.

• Easier documentation process: A major advantage of applying to a loan app for a personal loan, is that you don’t need to wade through pages of application forms and attach your documents to them before submitting the lot to their office, in person. Indeed, the app allows a fully digital interface wherein you can upload the documents on the app and await disbursal, without making any trips to the branch office to submit paperwork. The app requires just five documents from you: Personal ID proof, salary proof, bank statement, residence proof and photograph. Once uploaded, the app checks the lot and confirms approval of the loan. This ease of documentation is not seen with traditional lenders like banks.

Conclusion

An online app offers a better proposition in terms of speed, efficiency and ease of use, than a traditional lending institution.

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