Benefits of online Personal Loan over Traditional loan
A personal loan is an unsecured loan that you can avail to fulfill any financial obligation. These loans come with many attractive features like unrestricted end-use, minimal documentation, simple eligibility and quick approvals. Today you can easily apply for a personal loan through money loan apps or through the lender’s website. This has made it easier than ever for anyone to apply for a personal loan.
In addition to the ease of access there are several benefits of availing an online loan over traditional loans. The interest rates offered by the new-age online loans are much lower as compared to the traditional loans. This is because of the reduced operational costs and increased digitalization. With advanced technology like AI and ML, fintech companies have significantly reduced their cost of operations.
In addition to these there are several other benefits of availing an online loan over a traditional loan. Read on to know more.
How Does an Online Loan Work?
In an online loan, you can easily compare all of the loan options from the comfort of your own home or office. To apply for a loan online you need first check your eligibility, and then submit the necessary documents. The lender will then verify your loan application. Once your application is verified the lender will authorise your loan and disburse the loan amount within the next 24 to 48 hours.
How Does a Traditional Loan Work?
When applying for a loan traditionally, you first need to assess your needs and visit the financial institute to begin the loan process. Typically when you will visit the bank, a representative will explain to you all the detail regarding the intricacies of the instant loan procedure, features and benefits. They will address all your questions and clear all your doubts. Then you will need to fill out the application form and submit copies of the appropriate documents for KYC reasons.
Once you have submitted all of the appropriate documents and information, the bank representative will carefully evaluate your application. After your application is approved, your loan will be issued and deposited into your bank account within a certain number of days. The complete procedure takes some time, depending on the lender’s assessment, the amount of needed paperwork, and the loan processing time.
Why Is Online Loan Better Than Traditional Loan?
There are multiple reasons why an online loan is better than a traditional loan. We have listed the core reasons that will be enough to make you understand why we say so.
- Easily Accessible
Unlike a traditional loan you do not have to visit the bank to apply for a personal loan. You can just download a loan app or visit the lender’s website and fill out the application form online from the comfort of your home. You have to submit the documents online and wait for the loan to get approved.
The best part about an online loan is that you can check the eligibility criteria online and compare several options before settling for your lender. With traditional loans, you are restricted to choose the lender having a branch near your house.
- Lower Rate of Interest
There are many lenders available online. Each of these instant loan lenders will offer you a different rate of interest depending on your credit profile and their terms and conditions. You can browse the web to find the lender with the lowest rate of interest and apply for it to get maximum benefits.
With traditional loans, you may not get many options to choose from and there might be a monopoly of the lender. In addition to this, the cost of operation of traditional lenders is much higher which results in high rate of interest.
- KYC Documentation
KYC is a necessity for any financial transaction. This documentation must be posted on the lender’s webpage for online personal loans. They will verify the validity of the documents and immediately authorise your loan.
Physical copies of each document are required for traditional loans. Each document will be scrutinized and authenticated by the lender. The procedure may take days because there is a lot of documentation and physical verification involved.
- Procedure Duration
Your eligibility is determined when your KYC documents are uploaded, and the loan is instantly authorised and disbursed. Lenders now employ cutting-edge technology to streamline the procedure and make it more user-friendly in online procedures.
In comparison to that, an offline procedure takes a lengthy and laborious verification process. There is a significant amount of paperwork. As a result, the processing period is substantially longer than for loans obtained online.
- Charges and Fees
The rates and terms of an online loan are fully stated on the lender’s website. There are no hidden fees associated with loan processing. However, in the case of offline loans, you could have to provide an agent with a commission. You will be responsible for paying for any attestation or authentication that the lender requests on stamp paper.
Online personal loans offer better transparency. You can read the terms and conditions online before availing the loan. But in case of traditional loans, you may discover hidden charges due to a lack of transparency.
- Tools and Features
Online loans include a lot of useful tools. Tools like a loan eligibility calculator and an EMI calculator are available with an online loan. You can use the loan eligibility calculator to figure out how much you are eligible to apply for.
The loan EMI calculator is an automated tool that estimates the monthly instalment you will be required to make on your loan. In an offline loan, you will get to know about your loan amount and EMI when you will visit the bank’s branch.
Although there is a growing demand for online personal loans, many consumers still favor offline loan processing because they value face-to-face interaction. As a result, you may apply for a loan either offline or online using a personal loan application or from the lender’s website.
It is best to thoroughly understand both the loan procedure and your alternatives before making a decision. With online loans, you also get better terms on repayment. If you avail the loan through a loan app, you will get constant reminders. This helps you avoid missing out on your loan repayments and maintain a good credit score.