Technology has set its footprint in every domain in the world. It has brought about a seismic shift in the banking and finance sector as well. Digital finance helped ease by bidding goodbye to long queues and multiple trips to the finance partner’s branch. Nowadays, no matter how big the financial transaction is, one can quickly get it done using their phone. One of the most disruptive changes brought about by technology is how personal loans have changed according to the trends.
Online personal loans nowadays have been made almost instant. Lenders offer 2 minutes to 24-hour loan approval windows. Once done, the loan is disbursed directly to your bank account. The ease of availing of home loans quickly and repaying them through auto-debit is one of the most crucial game-changers one has ever seen. There are more loan trends in the market. Let’s check them out.
5 Game-Changing Personal Loan Trends:
1. Increased Demand For Digital Lending Channels
The pandemic has been instrumental in driving the growth of digital lending platforms. Social distancing and the inability to reach the branch during lockdowns showed a massive spike in the adoption of touchless loan apps. The convenience offered by the easy to use applications and digitizing application process and digital document processing for quick approvals have enabled people to avail online personal loans through digital lending channels. The apps have nullified the tedious paperwork involved in applying for loans, making the process quick and easy.
2. Increase in NBFCs
There was a time when traditional financial institutions were only banks. Now the trends have changed, with many NBFCs coming forward to cater to the lower-income segment of the population. Getting small business loans is also a breeze through NBFCs compared to banks. The documentation is easy and loan approvals are faster.
3. Increased Preference for Non-Tier-I Markets
The digital adoption by financial institutions made it easy for people across the country to apply for personal loans from anywhere. Suppose there isn’t a lender’s branch in your location, you do not have to worry. You can quickly check for competitive interest rates online and apply for a lucrative personal loan through apps and loan websites.
4. Lenders Adopt New-Age Underwriting
The credit history is another addition to the lending platforms. It is a record of your repayment history and credit card spending that the CIBIL records to determine credibility. Loans are sanctioned based on your credit score. The financial institutions have also adopted specific data collection methods. The data collected helps them to formulate marketing strategies and detect frauds. It also understands the borrower’s financial habits and repayment capacity. New-Age Underwriting allows them to sanction loans sooner than following the conventional loan process. Some apps offer 2-minute loan sanctions leveraging technology and big data.
5. Rising Competition In Lending Market
The personal loan rates have reduced drastically after the pandemic. The loans are provided at low-interest rates. Additionally, unlike before, the loan products are focused on customer convenience. The customer can choose Payment methods, repayment tenure, etc., and decide how to repay the loan. Personal loan calculators are being provided to customers to easily calculate their loan amount eligibility within seconds without any help.
Summing Up
The fintech sector has evolved with a lot of changes, especially with the onset of the pandemic, and the changes are likely to continue in the future. Over the next 5-10 years, there will be a substantial disruptive evolution with the growing technological adoption and the competition that prevails in the finance facilitation market. In the end, it is a great boon for customers owing to the quick and easy loan taking processes that are coming in place.
