Mahesh Shukla, the Founder and CEO of PayMe, has over ten years of experience in banking, finance, and FinTech. In the field of finance and investment services, he had tight working relationships with reputable companies, including Bank of America, Barclays Shared Services, and Evalueserve. His expertise included financial modelling, equity research, product development, market research, and credit evaluation.
Digital lending encompasses financial transactions through online platforms or mobile applications with the application of technology in authentication and credit valuation. The rapid advancements in cloud computing, artificial intelligence, and blockchain and the deep penetration of internet connectivity have fuelled the rise of Fin-tech companies driving the digital transformation of finances. Especially during the pandemic, while public movements were restricted making it difficult for people to avail of emergency loans from conventional sources like banks and non-banking financial companies (NBFCs), the trend of digital financing escalated.
The digital marketing market in India has increased significantly in the previous two years with the market projected to be worth $ 350 billion by financial year 2023 from $ 150 billion in the financial year 2020. The digital lending market worldwide is anticipated to reach $20 billion by 2026, representing a compound annual growth rate of 19.6 per cent. Alike conventional lending the operations of digital lending is also regulated by government financial regulatory bodies. However, with the financial processes going online, there are increasing risks of cyber security threats endangering the online loaning structure. Thereby, there are certain steps to be mandatorily considered before applying for a loan.
Lender’s credibility
Availing of a personal loan is a crucial decision for every individual and most responsible borrowers chalk out plans of repayment before applying for a loan. In personal loans, the interest rates can vary from lender to lender and taking a loan from an unknown lender might result in high EMIs. Hence, validating a lender’s credibility becomes important while applying for a personal loan. The safest way to opt for a personal loan is through lenders which are verified by the Reserve Bank of India (RBI) and has a reliable lending history.
Terms & conditions
Taking a loan, online or physically, always requires making an informed decision by thoroughly going through the fine print of the terms and conditions and privacy policies. While these minute details can often be overlooked, there should be a clear understanding of key factors like repayment schedule, charges, default charges, etc. Ignoring such details might lead to higher charges in late repayments.
Market research
While availing of a personal loan is a crucial decision for an average-income individual, picking the best choice becomes imperative. Thereby, before opting for a personal loan, one should carefully study and compare all lending options by analyzing the interest rates, lending terms, loan tenure and repayment options.
Credit score
An individual’s credit score plays a prime role in any loan approval and also impacts the interest rates. The credit score depicts an individual’s overall financial health by considering factors like income, existing debts, borrowing behavior and previous repayment history. Generally known as the Credit Information Bureau (India) Limited (CIBIL) score, a score of 750 or more is usually considered impressive for convincing lenders to disburse an affordable personal loan.
Scrutinizing sources
While digitalization has eased up major financial processes like availing loans, there have been escalated risks of cyber security fraudulence too. Thereby, opting for a loan from an unofficial or unverified source can result into major losses as on the process one will be sharing his / her confidential information such as an address, PIN, bank details and account number.
Physical contact
The very base concept of an online loan is to make the lending process contactless, safe, convenient and hassle-free. Hence, if any company agent is requesting a physical handover of any documents, it might / must be considered as an imposter, as it goes exactly against the very structure of online lending.