Is It Secure to Get an Instant Loan Through an App in India?

 

Instant Personal Loan App

Although the concept of a instant personal loan has become popular in India over the past couple of years, one doubt which continues to remain intact in the hearts and minds of borrowers is the safety of availing an instant personal loan in India through a mobile application.

 

In the light of recent events, where several borrowers where several borrowers across the country committed suicide due to constant harassment from lenders, it is only natural that several of us are now reconsidering whether taking a personal loan is actually a good idea or not.

 

Thus in today’s blog post, we will speak about the same in detail, and we will shine light on the issues which are troubling borrowers the most.

 

Without further ado, let’s get started.

 

Difference between Banks and Personal Loan App:

 

One of the first and most important aspects we ought to understand is the actual difference between availing a personal loan from a bank or a financial institution and a personal loan app like ZinCash. At its essence, personal loans are delivered to the end consumer in three major ways.

 

●       Direct bank loan

●       Loan from an NBFC, and

●       Loan from a fintech application

 

Let us understand each of them in detail.

 

1.      Direct Bank Loan

 

The first option, which is preferred by most borrowers across the country, is to directly approach a bank or a financial institution and request a personal loan.

 

In this case, as a borrower, you are only transacting with a single party, that is, the bank or the financial institution. There is no other third party involved in this transaction, and all you need to do is to fill out the application form provided by the bank and post-approval, the bank will directly transfer the loan amount to your preferred bank account.

 

One of the major reasons why borrowers prefer this mode of availing an instant personal loans is because they can physically visit the banking branch located near them, which instils a sense of trust and genuineness. Along with this, since the bank is the only third party processing their loan application their data is also not shared with anyone else, making the entire process more secure and transparent.

 

2.      Loan From NBFC

 

Now the second method of availing a personal loan is by approaching an NBFC or a non-banking financial institution.

 

Various NBFCs across India like Zavron have acquired lending licenses from the RBI, by leveraging which they can extend borrowers the ability to quickly access affordable capitals.

 

Although the ticket size of loans from NBFCs are generally smaller (₹10,000 to ₹200,000) however as compared to banks, NBFCs have a standing reputation of processing loan applications much faster, ensuring that the borrower gets access to the capital when they need it the most and not at a later date.

 

In the case of some personal finance applications like ZinCash, which are owned by NBFCs, you do not need to transact with any other third party as once you complete your loan application from the mobile app; the NBFC will directly process them at an expedited speed and post approval, the loan amount will be transferred to your bank account instantly.

 

3.      Loan From Fintech Applications

 

Last but not the least is a personal loan from a fintech application.

 

These days there are multiple fintech applications in the marketplace which act as technology partners to NBFCs. Essentially in this model, you are required to download the fintech application on your mobile phone, complete the personal loan application form and post that your details are shared with the NBFC for underwriting (approving) your loan. Thus in this arrangement, there are essentially three parties involved, you the borrower, the fintech application and an underwriting partner, which is generally an NBFC.

 

A lot of fintech applications in the market today follow this approach, as it is beneficial for both the fintech company as well as the NBFC partner in terms of acquiring more customers and generating more revenue.

 

Things to Keep In Mind

 

Now that you understand the three business models followed by institutions which render you a personal loan, it is important for you to understand that each of them have their own advantages and disadvantages. Shared below are the most significant of them.

 

1.      Direct Bank Transfer

 

Pros

 

●       You are transacting with only one institution

●       Is regulated by the RBI, Reserve Bank of India

●       You can avail a large loan amount

 

Cons

 

●       Longer processing times

●       Physical application forms and processes

●       Loan amount is not immediately disbursed

 

2.      NBFC Loan Application

 

Pros

 

●       Completely paperless lending experience

●       Can complete the entire application from the comfort of your home

●       Funds are disbursed instantly upon approval

 

Cons

 

●       Disbursement amount is less as compared to banks

 

3.      Fintech Applications

 

Pros

 

●       100% paperless lending experience

●       Intuitive and simple interface

●       Funds are disbursed instantly upon approval

 

Cons

 

●       Need to verify the underwriting partner is crucial to your safety

●       Interest rate is more, compared to bank and NBFC personal loans

 

As you can understand from the above list, there are advantages and disadvantages to either of the methods you choose to avail the benefits of a personal loan; however, it is your responsibility that you cross-check the background of both the personal loan application you are using as well as their underwriting partner before you sign the loan agreement or request the transfer of the loan amount to your bank account.

 

In Conclusion

 

To answer your question of is it safe to avail an instant personal loan app from an in India, the answer to this depends completely on you.

 

As you have learned by now, there are several such personal finance applications in the market which claim to be legitimate but are not, and thus it is our advice that you cross check every parameter before you go ahead with your application process to ensure your complete safety and security.

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