Know all the advantages and methods to be aware of fraud

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Financial technology or Fintech has completely changed the face of the traditional financial services industry. Customers no longer need to physically visit financial institutions.

They don’t have to wait in long lines to reach the counter. They don’t have to fill out lengthy application forms. And they don’t have to wait much longer to get loans approved and credited to their accounts. We live in a digital world where all these functions can be performed online without any physical interaction.

With the advent of fintech companies, consumers can conduct banking and investment transactions from the comfort of their homes. All they need is a smartphone and an app backed by a stable internet connection. Due to the speed, convenience and flexibility of these solutions, digital lending has gained popularity among the popular masses even in Tier 2 and Tier 3 regions of the country. The total number of loans sanctioned by NBFCs through digital lending platforms increased by more than 55% between 2018 and 2020, indicating the rise of digital lending across India. And that’s just the beginning !

Advantages of fintech loans

The growing adoption of fintech loans is attributed to several factors. For example, fintech companies are keeping up with digital onboarding using new era techniques like e-KYC and eSign, thus minimizing or completely eliminating the need for physical paperwork. Consumers can opt for loans by submitting documents such as PAN card, Aadhaar card, income statement, etc. online. on an app or website.

To analyze consumer creditworthiness, fintech players rely on efficient underwriting algorithms, which allow them to sanction loans only to genuine borrowers with positive intent and a good repayment history, almost immediately.

Traditionally, it takes about 7-8 working days for the lenders to disburse the loan. But with fintech, a borrower can get money credited to their account within hours.

Obviously, fintech loans are fast, convenient and transparent compared to conventional lending methods which are very tedious and time-consuming. However, as a borrower, there are a few things you need to keep in mind when taking out loans from fintech companies.

To begin with, a borrower should check and learn the credibility of the lender before availing a loan. For this, they need to go through their testimonials, read the negative and positive reviews and find out whether or not the lender is being honest with the customers throughout the transaction. One of the best ways to get honest feedback about the lender is to contact past borrowers and find out all the pros and cons. Access to these inputs will help borrowers make informed decisions and protect them from any kind of hidden costs.

Once the fintech is finalized, remember to read the fine print during the loan process. You should read and review all redemption terms and conditions, including processing fees, prepayment fees, defaults and late payments. This simple practice will help you save unnecessary costs. In fact, borrowers should know that any fintech lender is legally bound to keep all terms and conditions transparent with customers.

Another aspect that borrowers should pay attention to is EMI. They must carefully calculate EMIs and ensure that these payments do not act as additional charges and suck up all the savings. Therefore, use the EMI Calculator to find out the exact amount that needs to be repaid each month and for what period, without affecting your overall financial situation. It is always advisable to keep EMIs below 10% of monthly salary.

And in case it is higher, you should carefully plan other expenses and try to reduce them as much as possible.

Borrowers also need to consider a few other aspects, mainly regarding safety and security.

For example, fraudulent lenders always target high-risk debtors who are always looking for quick loans. These lenders generally force consumers to opt for a loan. Once they go there, they constantly harass them to refund money by calling and even calling back other family members. Also, these lenders do not share their physical address so that no one can find them. Borrowers should also carefully review the application or website before availing a loan.

In a word

Digital lending has grown tremendously in India thanks to the breakthrough innovations brought by fintech players. In fact, today our country is one of the fastest growing fintech markets in the world, with digital lending likely to hit the $350 billion mark by 2023. However, despite all this growth and these extraordinary developments in this segment, borrowers should keep the aforementioned points in mind before approaching fintech companies. This will not only ensure security against fraudulent activity, but also make refunds smooth and transparent throughout the financial journey.



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The opinions expressed above are those of the author.



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