Digital lending is changing the way banks and financial institutions give loans to customers. Thanks to technology and the internet, digital lending makes it faster, easier, and more convenient to apply for loans. In today's digital world, there's been a big change in how financial services work, and digital lending is at the forefront of this transformation.
In India, digital loans have completely changed how people borrow money, making it easier, quicker, and more transparent. This blog will check out what digital loans are and how they work.
A digital loan is just what it sounds like – a loan you apply for and handle online. You don't have to deal with paper documents or go to the bank in person. Everything, from applying for the loan to getting approved, happens online, making it quicker and more convenient for the people borrowing the money.
A digital loan is better than the old ways of lending. It is convenient, transparent and has widened accessibility.
According to reports, the market of digital lending in India is growing. In 2022, it was worth about USD 270 billion, and the amount of money disbursed increased by around 11%. This shows that more and more people in the country are liking and using digital lending solutions. This is why several digital lending platforms in India have shown tremendous growth in a short period.
Digital lending is becoming one of the fastest-growing segments of fintech in India. Between 2012 and 2020, the digital lending in India increased from USD 9 billion to nearly USD 150 billion. This growth shows there's a lot of potential and opportunities in the digital lending business.
Also, the funding that goes into digital lending in India has gone up. In 2021, the digital lending sector got funds worth USD 1.2 billion, which is a big increase from the year before. This increase in funding shows that investors believe in the digital lending India market and think it's going to keep growing.
The working of digital lending can be broken down into seven key stages:
The loan lending process starts with an internet search. When someone needs money, they start by looking for solutions online. There are lots of digital lending platforms out there, so people search online to find loans that fit what they need. This first step sets the stage for an easy and user-friendly borrowing experience.
After finding a lending platform that works, borrowers start applying for the loan online. The applications for digital loans are made to be easy for users, asking for basic info like personal details, income sources, work history and why they need the loan.
This simple application process sets digital lending apart from the old-fashioned way, getting rid of the need for lots of paperwork.
Next up in the loan lending process, the borrower needs to send certain documents online to check if the info they gave in the application is right. These documents can be things like proof of who they are, where they live, how much they earn and bank statements. Lots of lenders have teamed up with government databases and banks to check and verify these documents easily.
Whether someone gets a loan or not depends a lot on their creditworthiness. Digital lenders usually look at something called the Credit Information Bureau (CIBIL) score to figure this out. The score is based on how someone has handled credit in the past and gives an idea of how likely they are to pay back a loan. Building your credit score is very important as a higher CIBIL score makes it more likely for the loan to be approved.
The loan approval or rejection depends on a few things: how good the borrower is with credit, how much they earn, and what the lender thinks after an internal assessment. With digital lending platforms, the approval often happens super-fast, making the whole process quicker.
After getting the thumbs up for the loan, the digital lending platform moves on to giving out the money. What makes digital loans stand out is how fast the money gets sent right to the borrower's bank account. This speedy process is helpful in situations where a quick financial solution is needed.
With digital lending platforms like Tractorkarvan, borrowers can pick repayment plans that fit their financial situation. You can pay back the money using digital channels, and sometimes, automated systems make the whole process easier. If you pay back regularly and on time, it's good for your credit history, showing you're responsible with money.
Tractor Financing in India has evolved over time. Financing a tractor earlier often met with challenges like lack of proper documentation and limited credit history. As a result, financial institutions gave tractor loans with scepticism. But with the onset of digital solutions, tractor financing has come of age. Some of the benefits of digital lending are:
In conclusion, digital lending in India marks a transformative leap in financial accessibility. By streamlining processes, enabling quick approvals, and ensuring remote accessibility, it empowers individuals with efficient access to loans. This innovative approach not only enhances financial inclusion but also fosters a more dynamic and responsive lending ecosystem.