In the digital era, everybody needs money urgently, but it can take weeks to get a personal loan from a bank. In such a situation, your work could be affected. So, what do you do? Suddenly, you come across an advertisement for a digital finance company. Their loan application process is quick. You simply download the app, complete some KYC formalities, and receive a couple of calls for verification. After providing some information, your loan is approved within a few hours, and the amount is transferred to your account shortly after. This is the convenience offered by online personal loan companies.
What is a Digital Loan?
A digital loan is a loan offered and processed entirely online, rather than through traditional in-person methods. Digital lending leverages technology to streamline the entire process, from application to disbursement. This approach makes the process faster, more accessible, and highly convenient for borrowers.
The Miracle of Online Loans May Prove Costly
Getting an online personal loan within hours may seem convenient, but this miracle could come at a high cost. In the rush to secure a loan, you might end up paying exorbitant interest rates. Any negligence during the process can turn the seemingly helpful online lending company into a nightmare. Sweet words during the loan approval process can quickly turn into rude behaviour if payments are delayed. This could lead to harassment by recovery agents, who may show up at your home and misbehave, or even drag you into prolonged legal trouble.
Why Do People Fall Into the Trap of Online Loans?
If banks offer personal loans at lower interest rates, why do people opt for online loans? The main reason is that banks thoroughly check the credit history or CIBIL score before approving a loan. A poor score often leads to loan rejection. Banks also require multiple documents, making the process tedious and time-consuming, sometimes taking weeks. In contrast, online lenders provide quick and easy approvals, making them a tempting option.
How Can Banks Be a Better Option?
Traditional bank loans are more reliable than online loans, especially if the process is made faster and more user-friendly. While banks may have stricter criteria and take longer to disburse funds, they offer loans at significantly lower interest rates. Improving their approval speed and simplifying document requirements could make banks the preferred choice for personal loans.