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