The Nitty Gritty of Applying For a Loan Online
In the recent years, the internet has grown into a virtual world with endless possibilities. You can now shop for clothes and shoes, buy groceries, and even kickstart your own business, all online.
Many banks and financial institutions have taken advantage of this trend and begun to offer their services through online portals as well.
Now, applying for a loan online may seem like a far-fetched idea, but this facility is available at present across all major financial institutions, and it would be a shame to ignore the simplicity with which it can be used.
Of course, there are a couple of things you need to keep in mind about online loans before you actually sign up for one. Let’s look at them.
Scout out the Options
The advantage of applying for a loan online is that you have a wide range of options to choose from. You’ll find multiple lenders willing to approve your loan online, each with their own unique offering in terms of interest rates and repayment tenures.
So don’t settle for the terms offered by the first lender you find online! Do a little research and spend a considerable amount of time scouting your options. This way, you’ll be able to zero in on a lender that offers terms and conditions that suit your requirements.
Interest Rates May Be Higher
One of the biggest benefits of procuring a loan online is that you can have your loan approved even with a poor credit score. Online lenders won’t be able to inspect your credit score before approving your loan, so you won’t have to worry too much about it.
Of course, this benefit comes with its own drawbacks. Lenders put themselves at risk by offering a loan to an individual with poor credit. So if your credit score is below-average, the lender you approach will often charge you a higher interest rate than the rates being offered on the market.
When you’re low on cash and looking for funds, an online loan application is the simplest way to put some cash into your wallet. Most banks and financial institutions approve online applications for loans instantly, and you won’t have to face delays or borrow money from other sources while you wait.
These are a few things to remember when you’re applying for a loan online. The process is a lot smoother, and you can apply for various types of loan using the internet.
A personal loan is a sum of money that you can use for a variety of purposes. Whether it’s funding a wedding, taking a vacation, or even paying off another loan, a personal loan can cover all your expenses.
Applying for a personal loan is a fairly simple process. Just log on to your lender’s website and fill out the application form with all the required details. You’ll also need to provide a variety of documents for your lender to verify.
This paperwork includes proof of your identity, address proof, and age proof. You’ll also be required to furnish your salary slips and bank statements for the last 3 months. Finally, you’ll need proof of your work experience or source of income, for the bank to verify whether you’ll be able to repay the loan.
All you have to do is scan these documents and add them to the online application form.
Buying a new house is a huge decision, and you’ll be investing a considerable amount of time and money in the process. A home loan can grant you the necessary finances required to purchase a brand new house.
When searching for a house, you may come across a place that seems cosy, and the owner may even offer you a sweet deal. But if you fail to make the payment on time, the owner may rescind their offer, and even sell the house to another customer.
That’s where taking a loan online can help out. Your request will be approved instantly, and the funds will be disbursed within 72 hours of your application. So you’ll be able to make the payment in time and satisfy the owner.
The paperwork for a home loan is similar to the documentation required when applying for a personal loan. You may be required to provide additional documents like your ITR statements as well, in case you’re a self-employed professional.
You can avail a business loan only if you’re a self-employed individual, a partnership firm, or a public or private limited company. And now you can procure one of these loans through an online application process!
Business loans can be taken for a number of business-related concerns. You can apply for one to gain the necessary financial assistance to help your business grow, to use the money as an initial investment to kickstart your business, or even to buy a piece of equipment for your factory.
Along with the necessary documents required to avail a loan, you’ll need to provide your balance sheet, profit and loss account, and ITR statements for the last two years. You’ll also have to furnish the KYC documents of a co-applicant, in case of a partnership firm or if applicable otherwise.
Once you’ve filled out the application form, you need to scan the necessary documents and attach them along with your application form, for your lender to inspect.
These are just a few types of loans that you can apply for online. There are others like a loan against property, gold loan, consumer durables loan, all of which you can apply for online.
Assess your Finances
Before you log on to a lender’s website, it would be a good idea to assess your finances and determine whether you can actually afford the loan.
Your monthly income should be enough for you to be able to comfortably pay off your EMIs while still meeting your other financial requirements. To make things simple, use a monthly EMI calculator to figure out the EMI you would have to pay on a particular loan amount.
To be safe, avoid taking a loan amount where the EMIs will take up more than 40% of your monthly income. Life is full of surprises, and you never know when you’ll be caught off-guard by some unexpected event that could impact your financial situation. So keep aside a considerable amount of your income, in the event that you come across any unforeseen circumstances.
Technology exists to make our lives a lot simpler, so why not integrate with financial services? There’s still a lot of social stigma surrounding the act of applying for a loan online. But there’s no reason to worry. The process and costs involved are transparent and displayed on a lender’s website for all applicants to see.
Read the offer documents and various other details carefully so that you know what you’re getting into, before you apply.
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Arwind Sharma is a financial advisor with an experience of more than 15 years. He has worked for topmost financial firms in India and has been a visiting faculty at many reputed institutes in India. Currently based in Pune, Arwind Sharma is a name to reckon with when it comes to financial management for big brands. A post-graduate in business economics, he is an alumni of Princeton University, USA. During his free time, Arwind teaches children from marginalised sections of society and also work on his blog on photography.Read Full Bio