New age fintechs are transforming the financing space and making loan processing more convenient than traditional banks. Apart from processing loans instantly, fintechs are offering customised products to meet the requirements of the borrowers. Enabled by technology, these firms are not just making credit more accessible but also providing a refined customer experience.

Here’s a look at some of the key benefits of taking loans from fintechs:

Quick approvals:

Fintechs offer faster applications, approvals and disbursal of loans which may take weeks at traditional banks. This is possible as some fintech lenders use AI-driven models to check the credit score of the borrower and repayment history.

“Unlike traditional lenders, fintechs utilise advanced AI-models driven by efficient underwriting algorithms to leverage alternative data to evaluate borrowers’ present and future cash flows and assess their repayment capacity, more effectively,” Vivek Veda, Co-Founder of Fintech Association for Consumer Empowerment, told Outlook.

Also read: Securing instant loan from fintech? Check eligibility criteria

Less paperwork: Fintech lenders leverage e-KYC to get digital signatures on loan agreements from the borrowers. Borrower can also upload documents like PAN card, Aadhaar card, salary slips and bank statements for processing the loans on the website or app of the digital lender. This ensures less paperwork and quick loan disbursal.

Collateral-free loans: One of the biggest advantages of taking loans from fintechs is that they do not ask for collaterals. This is helpful for small businessmen.

Loans for new-to-credit borrowers: Digital lenders offer loans, ranging from Rs 15,000 to Rs 10 lakh, to new-to-credit borrowers unlike risk-averse banks and NBFCs.

Also read: Fintech credit cards: Here’s a look at pros and cons

Competitive rates and flexible tenure: Fintechs offer loans at very competitive interest rates in the market. Borrowers also get flexibility in the repayment tenure. While traditional banks charge the borrower for part or prepayment of the loan, fintech firms provide the option of zero charges on part or prepayment.

Transparent process: Loan application and approval from a fintech lender is an absolutely transparent process. The customer is always updated with messages or emails.

Also read: Bank stocks underperformance: Fintech threat in lending overdone, says Kotak Institutional Equities

First Published:Dec 6, 2021 7:58 PM IST