The current COVID-19 pandemic has put the economy on the verge of collapse. The pandemic, which began as a health concern, has gradually changed into a full-fledged economic crisis, resulting in numerous layoffs and company losses. With the unemployment rate rising and pay cuts becoming the new normal, an increasing number of individuals are finding themselves in financial difficulty. Emergency reserves have become an essential financial option at this point.
COVID limitations, on the other hand, have made it difficult for consumers to get emergency loans from traditional lenders like banks and NBFCs (Non-Banking Financial Companies). People are unwilling to visit these organizations in person due to social distancing conventions and fear of catching the virus, making internet platforms a hotbed for money lending activities.
Do’s of Using Digital Platforms to Apply for Loans
- Check the lender’s trustworthiness – Taking out a loan is a big financial decision since you have to think about how you’ll pay it back even before you borrow the money.
- Research, analyze, and then make an informed decision – Before deciding on a financing option, examine interest rates, terms, loan length, and repayment alternatives. Choose the most appropriate financing choice for your requirements and financial position.
- Maintain a decent credit score — While many new-age fintech organizations may go beyond the credit score in their evaluations, it is still an important factor to consider. In the lending procedure, a borrower’s creditworthiness is quite important.
Don’ts of Using Digital Platforms to Apply for Loans
- Say no to unauthorised sources — As the internet has grown in popularity, so has the number of online fraudsters and cheaters. Keep an eye out for non-verified loan applications that seek personal information such as your address, PIN, bank account number, and account number.
- Avoid taking out several loans at the same time – Taking numerous loans at once raises the risk of default, which can harm your credit score and limit your capacity to take out future loans.
- Avoid making physical touch; it might be a fake – The goal of the online loan structure is to make the lending procedure hassle-free, safe, and convenient. So, if a firm or agent asks you to physically pass over documents, you’re going against the basic structure of the online lending system.
- Checking interest rates is a crucial element of the research strategy, but it’s not the only thing to consider. It isn’t, however, everything. Pre-payment costs, processing fees, and pre-closure fees should all be considered because they may make a minor difference afterward.
In today’s fast-changing, technology-driven environment, remembering the recommendations listed above might be important to get the finest and safest loan available.