How fintechs are meeting the instant loan needs of borrowers

What’s working in favour of fintechs?

Recent statistics indicate that fintech companies have captured the lion’s share of the personal loan market and surpassed the market share that several top lending institutions once prided themselves on. If there is one reason why fintechs have literally dislodged traditional lenders in the merciless lending arena, it is their speedy application process. The turnaround time for loan applications is minimal. Traditional lenders take over 7-8 days to disburse a personal loan.

Features that make fintechs the most preferred choices for instant loans

Listed below are some attributes that have allowed fintechs to revolutionise the instant loan space in India.

Instant loan approval

When you apply for a personal loan with a fintech, you can expect to receive instant approval or rejection based on certain facets in your credit profile. Most companies use risk-assessment algorithms to evaluate the borrower’s credit profile in real-time and consequently generate temporary approval or rejection. Some parameters that determine initial approval or rejection include income, current organisation (whether listed or unlisted), credit score and age.

Digital verification

The best thing about choosing a fintech company for an instant loan is the digital application process and subsequent verification. For instance, say you apply for a personal loan from a fintech. Right from start to finish, you can complete the application process online. One can also upload their identification, income and residential documents online. The documents will then be digitally verified, thus saving you from submiting physical copies of the same. The process is so advanced and seamless that a visit from an executive/representative to verify your details and collect your documents is also not necessary.

Same-day loan disbursals

If you thought instant approvals were the best thing about instant loans from fintech companies, well there’s something that is way sweeter, perhaps the ideal icing on the cake. After your documents and other information are verified digitally, you will receive the loan amount the very same day. This is path-breaking development and miles ahead from traditional practices adopted by top banks. Traditional practices here can refer to physical document collections, physical verifications, et al.

Flexible loan amounts and tenures

Most private banks that offer personal loans (they don’t really offer instant loans) requires one to borrow a minimum of Rs 50,000 with tenures starting from 12 months and stretching up to 60 months. There isn’t a limit on the maximum loan amount that can be borrowed though, although most banks quote a maximum loan amount of at least Rs 25 lakh.

In the case of fintechs, however the ballgame is starkly different. One can borrow loans for as little as Rs 20,000, with tenures starting from just 3 months up to 60 months: another reason why  fintechs are today the more popular and fitting choice for personal loans.

Loans to employees of unlisted companies

A major reason why many applicants face loan rejections is because their company/employer is not listed. Top lending institutions have a list of companies in their database and offer loans only if you are employed in one of the listed companies. Fintechs, however, aren’t very stringent in their eligibility criteria. So, even if you are working in a start-up that is fairly established but not listed in the database of top private financial lending institution, there is no reason to be afraid that your application may be rejected on the basis of this parameter at least!

Loans to individuals living in shared accommodations

Fintechs offer loans to individuals living as paying guest and in shared accommodations. Private banks, however, don’t do that. So, if you stay in a shared accommodation and you haven’t been hesitant to apply for a loan thinking that your application will face rejection, think differently! Think fintech!

(The writer is Founder & CEO Qbera.com)