One of India’s first forays into the digital world was the creation of Aadhaar, a biometric-based identity card. While it’s success and failure is up for debate, it did plant the seed of a digital economy here.
Over the past one decade or so, many new financial services firms have started appearing at the forefront of the banking industry. These financial services companies are not like your traditional banks. They have tapped into the vast array of financial technology to harness it in ways that will help people everywhere. These fintech companies have been able to revolutionize the bureaucratic banking structure in India. As a result, people who did not have access to financial services can now avail small loans with ease.
More and more people now have access to smartphones and high-speed internet. So, in a way, the world going digital has helped the financial services industry to take advantage of what technology has to offer. Advancements made in this field have resulted in new products and offerings that serve unique purposes. Take, for example, small loans. Everyone has heard about personal loans, home loans, and even gold loans. But, what are small loans exactly?
What are Small Loans?
Small loans are a compact form of personal loans. It is an unsecured loan which is ideal for solving cash flow problems without creating too much of a financial burden. As the name suggests, the amount that you can take out can help you ease any short-term financial requirements. If you need to pay some emergency bills or have an urgent need for cash, this can be your go-to solution.
How have Small Loans Revolutionised Instant Cash Requirements In India?
When it comes to loans, people are usually skeptical about them. The way traditional banks have complicated the process of getting loans, it’s no wonder people don’t want to rely on them. So, it’s no surprise that they have caught on so fast when modern-day fintech firms started offering these loans. But, there’s more to small loans than this. The fintech firms that offer these loans have really gone out of their way to make it a worthwhile offering. Here’s how it is changing the landscape of instant cash requirements:
- Simple Process of Application:
When you are applying for a small personal loan, you can bid goodbye to those long bank queues. The process is really simple and all you need is a smartphone and internet. You can apply online from anywhere. In fact, it will only take a few minutes of your time to check whether you are eligible or not. If you are eligible, you can go ahead and apply for the loan.
- Interest Rates:
Small loans offered by fintech firms do not come with the hefty interest rates of credit cards. They are much lower and hovers somewhere around 1.50% to 2.25% per month. In fact, if you exhibit good repayment habits, chances are your interest rate might even be decreased over time. This will allow you to lower your costs and maximize your benefits from such a loan.
3. Flexible Repayment:
Fintech lenders offer you with the choice of choosing a repayment plan that suits your needs. You can repay the loan back in easy monthly installments and take a repayment tenure ranging from 3 months to a year. If you want to pay your loan off as soon as possible you can choose to take a smaller tenure but remember that the installment amounts will vary accordingly. Choosing a longer repayment period will allow you to pay back your loan in small amounts but it will also accrue more interest.
4. Easy Disbursement & Multiple Loan Amounts:
Once you have applied for a loan and submitted all required documents, it will take up to a day to process your application. Once your application has been approved, your loan amount will be disbursed directly to your bank account. Now, you will be able to use this sum to pay for anything you want to. As a matter of fact, to make things simpler you can take multiple small loans depending on your needs. Usually, these loans start from as low as Rs. 5000 and go up to Rs. 1 Lakh.
Is This A Sustainable Idea?
The question that arises with every new product is the factor of sustainability. It is safe to assume that small loans are here to stay. A revolutionary idea in itself, it can actually meet the cash requirements of a lot of people without putting them in a debt trap. It is convenient and easy to get as well as repay.
However, do keep in mind that these loans cannot solve long-term financial issues. If you need a short-term fix, then this product can definitely help you out. If you find yourself constantly taking these loans to fix your personal spending, then you should consider taking a different type of loan. So, in the face of an emergency or an unforeseen event that calls for the need to have some amount of cash available right away, this is the perfect loan for you.