The infusion of technology has revolutionised the financial sector!
You might have heard of stories where your parents or other family members would have to go to a bank and apply for a loan. The wait for the loan sanction would go on for months in some cases.
Today, though, you can apply for a loan without stepping out of your house. Let’s take a look at how new opportunities in the area of personal loans are emerging in the industry.
1) Loans for anything and everything
It is a great time to pursue your dreams without constantly worrying about costs. You have loans that can help you buy your first smartphone or laptop. And on the other hand, you have the opportunity to finance your dream wedding through a personal loan. For example, Tata Capital offers loans that help couples to celebrate a grand wedding. And it doesn’t end there. These loans can extend to fund your honeymoon even; so long as you are eligible for the loan.
2) Offline to online
To get a personal loan previously, a customer had to wait for a very long time. It could be weeks or even months before he or she could get money into their hands. Too bad if your loan wasn’t approved; you would have to start this time-consuming process all over again. The situation has been altered significantly due to the arrival of the internet.
These days, most banks and NBFCs offer a host of services online to customers. In most cases, you can check your loan eligibility by simply visiting the lender’s website. Further, you can submit your documents and other necessary details online itself. No need to physically visit the bank to prove your eligibility. Once your loan is approved, the funds are transferred to your account in a few hours.
3) Credit rating system
Processes have been simplified a lot due to improved functioning of credit bureaus. With the institutionalisation of credit rating systems, lenders can look up a borrower’s credit history in a matter of seconds. Higher scores reflect better credit history. This makes borrowers eligible for lower interest and quicker services. However, a poor credit score does not indicate that you will not get a loan. Lenders may still oblige but the loan comes attached with restrictions. For example, you may have to pay a higher rate of interest.
4) Increased focus on individual consumers
In the recent years, Indian banks have been left with a horrible aftertaste by lending aggressively to large corporations. A few companies have even gone to the extent of filing for bankruptcy due to their inability to repay loans. The ongoing Kingfisher fiasco is a prime example. With no sight of improvement in these situations, lenders are refocusing on other opportunities. To counter the slowdown in demand from corporate, banks and NBFCs are targeting customers in the area of personal loans. This comes as good news since the renewed interest enlarges the scope and opportunities for borrowers.
5) Introduction of MCLR
Marginal Cost of Funds based Lending Rate (MCLR) is a new methodology to compute benchmark lending rates. The RBI brought this methodology into effect at the beginning of financial year 2016-17. It is another attempt to pass on the benefit of policy rate cuts to borrowers. Generally, when the RBI announces rate cuts, it is not entirely reflected in the rates that banks offer to customers. Under these guidelines, new customers will have a reset clause in their loan documents. This means that at the end of a given time period, the interest rate attached to the loan is reset depending on the deposit rates at that time. So if the deposit rates are lower, your rates will fall and vice-versa. Personal loans are linked to a two-year MCLR rate; meaning, interest rates are reset after every two years.
The bottom line
These days, there is no reason to put off your dreams just because you think you can’t afford it. The personal loan industry has been around for ages. This doesn’t mean it is outdated. With new opportunities flooding the market, consumers are spoilt for choice. Whether it is buying a couch or an engagement ring, it has become so simple. Just go online, search for the best personal loan options and apply. Voila! The dream becomes a reality.
