How Is Technology Helping Easy Access to Personal Loans?

Thanks to technology, the global economy is experiencing a transformative shift in how money moves. Finance has become more inclusive and accessible to the masses with the aid of the right technological advancements. Banks and financial institutions have leveraged technology to improve their processes, offering faster and better services to their customers. Loans are a vital aspect of financial services, and technology has remarkably sped up applying for and obtaining personal loans.

In this article, we will delve into personal loans and discuss the top five ways technology has simplified the personal loan process. In the past, applying for a personal loan involved endless paperwork, cumbersome bureaucratic procedures, and long waiting periods for approval. However, all of that has been revolutionized by emerging technologies like machine learning, artificial intelligence, and data science. Keep reading to learn how technology helps to personal loan procedures.

What is a FinTech?

Simply put, FinTech refers to computer programs and other technologies that aid or facilitate banking and financial services. It represents an emerging sector in the financial services industry in recent years. Initially, the term was used to describe the technology employed in the backend operations of established consumer and trade financial institutions.

Technology Behind FinTech

Financial Technology is the application of technology in financial services, encompassing new software, applications, processes, and business models. Companies utilizing these technologies to offer financial services to customers are known as FinTech companies.

FinTech primarily operates as a back-end data centre processing platform and has evolved into an end-to-end transaction processing basis in recent years. These transactions are conducted over the Internet through cloud services.

Ways By Which Technology Has Transformed the Process of Seeking a Personal Loan

The rise of digital Personal Loans and the abundance of free tools and calculators available have made the process of applying for a Personal Loan incredibly straightforward. This is how technology helps to personal loan in the following ways:

Easy Online Application

Gone are the days of visiting a bank branch in person to request a personal loan and engaging in discussions with the lender about interest rates and repayment terms. Now, you can apply for a personal loan online from the comfort of your own home. The entire process, from verification to approval, is managed through online technology. You will need to provide essential KYC documents, such as your PAN card, AADHAR card, proof of income, and bank account statement.

Once you submit your application, the lender will review these documents, and if you meet the eligibility criteria, they will approve the loan. This streamlined process eliminates the need for physical paperwork, benefiting both lenders and borrowers, as it becomes easier to keep track of all the changes.

Comparing Lenders Has Become Effortless

Obtaining a Personal Loan is now significantly easier compared to the past. The retail lending market has witnessed a surge in new competitors as RBI allowed NBFCs to operate in this sector. As a result, borrowers now have a wide array of options available. You can effortlessly compare and access information about Personal Loan interest rates, eligibility criteria, maximum loan amounts, and other essential details—all through online platforms. This convenience empowers you to make an informed decision about the option that best suits your financial requirements.

Free Online Tools and Calculator

With the availability of free online tools like the personal loan EMI calculator and personal loan eligibility criteria calculator, estimating your personal loan EMI and the maximum loan amount you can borrow has become effortless. These calculators utilize basic criteria to provide transparent and convenient results for borrowers. By using the EMI calculator, you can easily determine the EMI amount for various repayment tenures, enabling you to select a suitable tenure that aligns with your budget. Additionally, the EMI calculator offers an amortization schedule, presenting a detailed breakup of EMIs throughout the chosen loan tenure.

Online Verification

Once you have submitted your loan application, you can fulfil the necessary requirements by scanning the required documents and submitting them online. Banks employ advanced technology such as AI and data analytics to verify your application and documents. However, the process doesn't end there. Banks can also access your credit report from the bureau online and assess your credit score, repayment history, and other relevant factors using a risk-assessment algorithm. This expedites the verification process and facilitates instant disbursal of personal loans.

Instant Approval

In the past, obtaining a loan involved the inconvenience of visiting a physical bank branch, enduring long waits or multiple trips to determine your eligibility. However, things have changed significantly today.

Banks now utilize specialized risk-assessment algorithms to conduct a comprehensive analysis of your credit profile and eligibility. Once your verification process is successful, banks can approve your desired loan amount. This approach allows them to assess risk factors more precisely, leading to more accurate and viable loan decisions.

Enhanced Accessibility

Various platforms have democratized credit access, enabling financial institutions and lenders to use digital channels to reach a more extensive customer base, surpassing geographical limitations. This newfound accessibility benefits individuals who were once underserved by traditional lenders, granting them access to a diverse array of loan options and empowering them to achieve their financial objectives.

Improved Speed and Convenience

Lending technology has done away with the days of waiting for weeks for loan approvals. Thanks to automated processes, streamlined documentation, and advanced algorithms, loan processing is now expedited, allowing borrowers to receive funds quickly.

Advanced Risk Assessment

Lenders are harnessing sophisticated algorithms and data analytics to evaluate borrowers' creditworthiness more accurately. They can access customers' credit history, income sources, and spending patterns through various platforms.

Flexible Tenure and Loan Amount

While most banks providing personal loans often lack the utilization of technology, they typically require borrowers to borrow a minimum of Rs. 50,000 with tenures ranging from 12 to 60 months. Conversely, Instant loans offered by FinTech companies do not impose a maximum loan limit, although many banks state a maximum loan amount of at least Rs. 25 lahks. Moreover, these loans are completely unsecured, eliminating the need for collateral or security.

Conclusion

So, this was all about how technology helps to personal loan. In addition to technology, the digital lending landscape heavily relies on data-driven processes. From the loan initiation stage to underwriting and post-disbursal activities, digital lenders extensively process data. Embracing new technological advancements becomes crucial for digital lenders to expedite specific procedures and turnaround times. The integration of technology has optimized loan processes, enabling digital lenders to adapt to evolving regulations, operate more efficiently in reduced timeframes, and maintain robust systems to ensure consumer security.