The Indian government has been actively working to make financial services more accessible to everyone in the country. This has shifted attention towards those seeking credit and the hurdles they encounter in getting loans. Thanks to advancements in technology and digital banking, a new landscape of financial technology, or fintech, has emerged, offering alternative ways to borrow money.
As a result, new financial products and services like instant digital lending have emerged, allowing consumers to access loans through their smartphones without visiting a bank. With nearly 500 million internet users in the country, digital lending has opened up opportunities for a large portion of the population to obtain affordable credit like never before. Let’s explore why digital loans are becoming popular among salaried individuals.
Why Digital Loans Are Popular Among Salaried Individuals
1. Ease of Borrowing
Loan apps have made borrowing significantly more convenient. Personal loans of up to ₹5 lakhs can be obtained with just a few taps on your smartphone. This means you can access funds on the go to meet unexpected expenses. Additionally, managing loan repayments is hassle-free as you can make EMI payments anytime, anywhere, preventing missed deadlines and penalties.
These apps also eliminate the need for in-person visits, long queues, and face-to-face interactions, which can be time-consuming and frustrating. This digital-first approach aligns well with the preferences of the younger generation. By offering quick and easy processes, these apps are reshaping the fintech industry.
2. Minimal Paperwork
Digital lending platforms streamline the loan application process by quickly assessing a borrower’s creditworthiness using customer-provided data. These platforms analyse various data points with predictive models and algorithms to determine a borrower’s financial reliability. Additionally, Aadhaar-based e-KYC has significantly sped up loan processing by eliminating paperwork in the verification stage. Unlike traditional banks often requiring guarantors, collateral, and extensive documentation for loans, digital platforms typically only need Aadhaar, PAN, and income details to offer you loan against your salary, and more collateral-free loan options.
3. Uncomplicated Eligibility Criteria
One reason digital loans are popular among salaried individuals is their simple eligibility requirements. To qualify for a personal loan from a digital lender, you generally need to:
- Be an Indian citizen
- Be aged between 21 and 60
- Earn a minimum net monthly salary (varies by location)
- Reside in one of their serviced cities
4. Attractive Interest Rates
Everyone knows that the interest rate on a personal loan is a big deal. It directly affects how much you’ll pay back. To attract younger borrowers, many lenders are offering digital loans with lower interest rates. This is a big selling point for millennials.
5. Instant Disbursals
Another great thing about digital loans is how fast you can get the money. Millennials are used to getting what they want right away, and they don’t want to wait around for their loan. With these loans, you can often get the money instantly.
6. Flexible Repayment Terms
Digital loans offer a range of repayment options, typically from 3 to 60 months. This flexibility lets you pick a term that works best for you. However, it’s important to remember that longer loan terms generally come with higher interest rates compared to shorter ones.
Repaying a digital loan is also straightforward. With flexible terms and manageable monthly payments, it’s easy to stay on top of your loan. Plus, making timely payments can help improve your credit score.
Keep in mind that longer loan terms mean smaller monthly payments but more interest paid over time. Shorter terms result in larger monthly payments but quicker loan payoff. Ultimately, the best option depends on your financial situation and preferences.
7. Debt Consolidation
With various credit options available, many people end up in debt. A digital loan can help by consolidating all your debts and improving your credit profile. Personal loans typically have lower interest rates compared to other credit options, making them a good choice to replace high-interest loans.
Debt consolidation is a major reason why digital loan apps are popular in India. Many borrowers use personal loans to pay off credit card debt and other loans, allowing them to manage just one loan EMI instead of multiple payments. This makes personal loans a practical solution for consolidating debt.
8. High-End Data Security
The digital lending app you download may track basic information like location, purchases, contact details, and identifiers. User content and financial data is collected and linked to your identity, but diagnostic data is kept separate and it isn’t linked to users. No information is shared with third parties, and all data is encrypted during transmission. In addition, users can request data deletion, which provides added peace of mind.
Closing Thoughts
Digital loans are becoming increasingly popular among salaried individuals for their ease and convenience. With simple application processes, minimal paperwork, and quick disbursals, these loans fit well into today’s fast-paced lifestyle. Flexible repayment terms and lower interest rates make them an attractive option, especially if you want to manage your expenses or consolidate debt. As technology advances, digital lending provides a practical and secure way to access funds, catering well to today’s needs.
Author Bio
Priyanka Rao is a content strategist for Jupiter.Money, and specializes in writing on topics related to finance, banking, budgeting, salary & wages, and other financial matters. She has a passion for creating engaging content that resonates with audiences across various digital platforms. In her free time, Priyanka enjoys traveling and reading, which allows her to gain new perspectives and inspiration for her work. With a keen eye for detail and a creative mindset, Priyanka is committed to creating content that connects well with her readers, enhancing their digital experiences.