The emergence of new-age technologies has transformed the fintech landscape. We live in an age that prefers comfort and convenience. Digital banking has brought some of the most revolutionary changes in the BFSI sector. The way people avail banking services is different from how it used to be, especially when applying for loans. Traditionally, loan seekers had to visit a bank branch multiple times, wait for their turn in long queues, fill out extensive application forms and submit numerous document proofs. And even after doing all this, a 100% guarantee that their loan will get sanctioned. This arrangement has now changed for the better. With digital lending, getting a loan is much easier and faster. 

Loans disbursal using digital platforms in a paperless way is called digital lending. One can apply for a digital loan on their smartphones in a short time of 15-20 minutes. Digital lending is gaining popularity in the current times due to its convenience of application and minimal restrictions. Moreover, owing to the lockdown restrictions, people prefer to bank from the safety and comfort of their homes. Digital loans also simplify the process by eliminating the need to fill out large application forms and carry around hard copies of document proofs. Another important feature of digital lending is fast disbursal. Many small businesses and start-ups require cash flow on an immediate basis, and this is where opting for digital loans serves as the best option. 

Although digital lending has myriad benefits to offer, loan applicants should be careful while going for digital loans. Like every other banking service, even digital lending has some risks. With a rise in new digital lending apps and companies, many fraud or fake apps can loot your money, pose unnecessary charges, or steal your personal information. Hence, loan applicants need to be vigilant about the bank or app they choose for a loan.

Read ahead to know in detail about all the things you need to consider before applying for a digital loan. 

1) Ensure the loan provider is RBI-registered: 

First and foremost, you need to check if the bank of the digital loan provider is RBI-registered. Verifying this will automatically ensure that the lender you choose is abiding by all the norms that include the rules that guard your privacy, data-collection parameters, etc. It will also help you determine that the lender is not charging you extra or selling your personal information. You can check the website or app description of the lender to verify if they are RBI-registered. 

2) Assess the lender’s credibility: 

There are many ways to check the vendor’s credibility if you’re planning to apply for a digital loan. You can check the app store ratings and reviews from the people who have used the app. You can check Google reviews, any testimonials, or comments on social media to assess if the lender is credible or not. Last but not least, you can ask your friends, family, or acquaintances if they have any remarks or reviews about the lender. 

3) Check their customer service: 

A good and credible lender always makes sure their customers are well-assisted at every stage of the loan lifecycle. You can check their website or social media accounts for their contact information and try contacting them to assess their responsiveness. A lender with a good customer-care service determines if they would be reliable or not. 

4) Avoid cash payments: 

When you apply for a digital loan, every transaction and process happens entirely online. Refrain from giving any cash or paying any charges to any agent. If you need to make any payment, make sure it’s done on the lender’s app or website to ensure the money reaches the lender and no one else.

5) Read everything carefully: 

We know reading everything can be a mundane task, but read all the terms and conditions carefully for your financial security. Check the repayment details, any extra charges, or late fees. Read about the interest, monthly payments, costs or fines for failure of repayment, etc. 

6) Never share your personal information: 

Last but not least, don’t share your personal information like OTP, pin code, or any passwords with any untrusted person or platform. Most digital lenders use a full-proof two-step authentication that ensures identity verification without compromising your personal information.

Applying for digital loans might be easy, but your money is not safe without being careful about certain things. We know convenience is essential for everyone, but it does not supersede security. To sum it up, digital lending is indeed an excellent way to get funds fast and sitting at home, but potential risks are still involved. Loan applicantsneed to be careful and avoid rushing the process. With more sophisticated security and privacy standards, digital lending is continually evolving to protect applicants from fraud and other malicious users. Now that you know the things you need to check before applying for a digital loan, ensure that you and your money remain secured.