“We are in the midst of a robust Indian consumer credit market expansion where we are seeing immense growth in both the number of accounts and balances for most major credit products, including credit cards and personal loans,” – Yogendra Singh, Vice President of Research and Consulting, TransUnion CIBIL.

The online credit market has been seeing a robust growth throughout the year with more and more young people opting for online personal loans to seek assistance during  financial crunch. Rishabh Salwan*, a Customer Care Executive, needed some quick cash to disburse his fees for an online MBA distance learning programme. He had already taken an auto loan and was in no state to saunter around banks for another loan. At last, he used an online personal loan app requiring no credit check to get his life sorted. Online personal loan apps are coming to the rescue of the masses who are often rejected by the banks due inadequate creditworthiness, or interest rates that are beyond the scope of repayments. Today, there are a number of fintech portals that provide personal loans for students and personal loans providing fast cash. 

As such rising aspirations of Indian consumers, especially the white, blue and grey collared class, has led to the growth in the volume of transactions across all portfolios and geographies in case of personal loans. 

Credit accounts saw 28% growth in origination to reach 107 million accounts and aggregate balance of all retail lending products saw 21% growth to reach Rs.28.9 trillion, in the third quarter of 2018 compared to year-ago  quarter, according to the latest industry report by credit information company CIBIL Trans Union. 

~Economic Times

Aspirations and desires are driving millennials to go overboard with their splurging and purchases often beyond the scope of their salaries. And they aren’t stopping or waiting for the piggy bank to fill!  Especially the young earning population living in metros and tier-1 cities – folks here do not shy away from using credit as a means of going on a vacation or purchasing their favourite bike. Tech advancements, machine learning, automation and AI clubbed together have oozed out some fantastic quick personal loan apps online that have simplified loans. From a cumbersome ritual involving loads and loads of rejections before one get approved to a mundane activity as if borrowing from a friend, online personal loans have changed the way one borrowed money. Traditional banks granting personal loans still follow the same customs of slogging as you fulfil the formalities and still get a rejection in return. 

Online personal loan apps such as EarlySalary are surging in popularity over banks because they are quick to disburse loans and don’t require lengthy paperwork. Besides, they offer consumers a personal loan EMI calculator to plan their borrowing. You can check your credit rating on the app as well. Let’s talk about a few quick pointers about why online personal loan apps are a rage nowadays.

#1 Changing lifestyles

The lifestyle patterns of new-age millennials are evolving. Instant lending apps now serve almost as instant digital wallets for the people who need not suffer during month-end  financial crunch. The times are shifting from postponing one’s needs to postponing one’s payment through these online loan apps. People take easy pesonal loans anywhere between INR 60,000 to INR 1 lakh to fund their dream holidays or ease up their cash flow for other expenses. 

#2 Frequency and Quantum of loans

Earlier loans were considered a burden and loan default – a stigma. With changing times and needs, loans have been serving petty cash requirements of even INR 5,000. A person may be opting for these online loans umpteen times during a year and sorting his repayment schedule likewise. This sort of routine seems almost impossible when it comes to banks and the efforts are enough to break your backbone. The frequency and quantum have increased and decreased respectively. While the variations in the loan amount as per the needs also ask for a facility that is quick, undemanding and economical. 

#3 Plastic money and online lending

Banks and other NBFCs provide less choices in terms of short term credit facilities. “As we started to explore solutions for this problem, we noticed that the underlying problem was much larger. The only product financial institutions offered was a credit card which was meant for customers with high incomes and high credit score and there were no short-term credit options for young Indians,” says Akshay Mehrotra, CEO and co-founder of EarlySalary. Also, people with low credit scores may not get a credit card. Credit card is often accompanied by heavy interest burden and patchy recovery agents haggling customers. 

#4 Cibil scores

Online lending apps don’t ask for CIBIL scores while granting loans. Students and employees find it easier to seek a loan of low value for a duration of a week to 51 days, and EMI based 3 months to 12 month personal loans. The best part –  your credit scores remain unaffected and your credit standing remains intact. 

#5 Ease and agility

These loans require no formalities and minimal waiting time. Customised plans without any human underwriting are involved. The prominent aspect of these loans is that they are getting accepted by the employees as financial wellness offerings from the companies who have collaborated with the apps. 

The loans earn brownie points for disbursing the loans in the accounts of the borrowers within 24 hours of the application. 

#6 App based

There are no physical barriers involved, nor is the need to travel to the nearest bank branch and get your loan sanctioned. Everything has been made feasible  on a single mobile app, from the loan application to uploading of documents to loan approval. You can be in the comfort of your couch and get the instant personal loan into your account. 

#7 Direct associations

“Today, we offer over 40,000 loans a month across product portfolios of 30 days, 3 months, 6 months and 12 months in terms of instant loans, salary advances, EMIs to shop now and pay-later products on Amazon, Flipkart and Big Bazaar and school fee payment options on EMIs.” ~EarlySalary. 

The portal alone has about 200 collaborations with renowned brands. Customers can use online loans to buy stuff from online portals and pay later in attractive EMI schemes offered by the lending apps. EarlySalary also offers education loans and the facility for paying school fees and meeting other such expenses. 

Online lending apps can offer effective funds at the right moment with little efforts.The future belongs to the Internet and the online lending apps are a clear sign. Though traditional personal loans may be far from being replaced completely, the argument that they are on their way out certainly has merit

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