Kolkata: Of all the types of retail loans in India, personal loans are the most popular. The principal reason is that it is an unsecured loan which does not need the borrower offering any collateral to the lender to secure the loan. Now a days, the access to personal loans has gone up with the proliferation of apps on your phone. Just be pressing a few buttons you can apply for a personal loan of a significant amount.
However, taking on any loan always carries a risk since one has to pay it back. Moreover, the interest rate on personal loans is the highest of all types of loans. Therefore, one should approach the topic of personal loans with caution, especially in this age of instant loans. A few concepts related to instant loans are explained below.
Key things to know before applying
Digital lending apps: Digital lending apps are digital tools which enables consumers to quickly apply for personal loans without getting off from their chair and enables lenders to decide who is eligible for loans. They render borrowing very quick and convenient, bringing the service literally to the tip of a finger. This involves borrowing money through online platforms and is available round the clock. These also employ AI and big data to quickly process loan applications The digital lending market can rise to $400 billion by 2028, according to one estimate.
Credit information companies: Credit Information Companies form an extremely significant constituent in the lending business. These are also known as credit bureaus and they collect financial data, especially data related to debt servicing by an individual. These information is processed to generate credit reports, which is further rendered into succinct credit scores. Lending institutions take a loot at the credit score (and credit report) to decide how creditworthy an applicant is. Any lending firm decides on an application based on the input of the credit score and sets interest rates and repayment period accordingly.
Annual Percentage Rate (APR): Annual Percentage Rate, or APR usually refers to the yearly cost of borrowing money and is expressed as a percentage. It includes the interest rate as well as other fees and charges such as like application fees, processing fees and or late payment fees associated with the loan, which offers a comprehensive view of the actual cost.
Key Facts Statements (KFS): A Key Fact Statement (KFS) refers to a document that offers a concise and easily comprehensible snapshot of the terms and conditions of a loan. It is designed to ensure transparency for borrowers. It contains the loan amount, interest rate, repayment schedule, fees etc.
Lending Service Provider (LSP): A Lending Service Provider, or LSP is a company or platform which is an intermediary and facilitates the lending process for regulated entities such as banks or NBFCs (non banking finance companies). These firms offer services such as customer acquisition, underwriting support, loan disbursement, servicing and even loan recovery. This service is rendered uaually through digital platforms. LSPs usually act in conjunction with banks and NBFCs and operate ont ehri behalf.
Applying for an instant loan is as easy as it is risky to take one thoughtlessly. Instant loans are one of the most expensive loans in the market since the interest rates are the highest in this category compared to home loans and vehicle loans. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
