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How Do Personal Loan Apps Work: Explained!

3 Mins read

Availing a personal loan is one of the best ways to save to get rid of financial trouble. Be it funding your wedding expenses, paying off medical bills, education fees or even managing home renovation expenses, a personal loan can be utilized for various purposes. Today, getting a personal loan in India has become extremely convenient, as lenders in India have made it easy for loan seekers to get quick access to money by introducing apps that have made it easy for one to apply for a loan anytime, anywhere. Read this article in detail to understand how personal loan apps work.

What Is a Personal Loan App?

Personal loan apps are nothing but mobile applications designed for helping you apply for a loan without having to visit a bank or any other lenders’ office. The app typically offers you access to unsecured credit from a bank, NBFC, P2P lending or a fintech company in India. The use of technology combined with the advent of money management tools has led to the popularization of personal loan apps that specifically cater to providing quick financial assistance to individuals in need of financial aid. The personal loan apps are mostly available on Google Playstore and iOS devices and can be downloaded for free of cost. 

When applying for a personal loan through an app, one can get a loan amount as high as Rs. 40 lakh depending on one’s eligibility criterion and credit score. Typically, the loan is offered for tenure up to Rs. 60 months and can vary from lender to lender. Many online lenders in India make it easy for you to apply for the loan through their app and even make the EMI payments via the same. Additionally, few online lenders like Upwards also offer you access to financial knowledge that is important to understand before applying for this type of credit line in India. Upwards also lets you play quizzes and refer and earn rewards by helping your loved ones get quick access to loans. 

Benefits of Using a Personal Loan App

Here are a few benefits of applying for a personal loan from a mobile app:

Collateral-free: Personal loan is an unsecured type of credit line that can be availed without having to keep any collateral i.e. you don’t have to pledge assets like your car, jewelry, mutual funds, insurance policies or any other to get your loan approved. This ensures you stay risk-free without having to worry about losing the assets in case of non-repayment of the loan.

Easy application process: Application for a personal loan from a mobile app can be made from the comfort of your home without having to visit the lender’s office or to do any physical documentation process. 

Minimum documentation: Personal loan apps do not require you to do any paperwork as you can submit documents online in PDF or JPG format. Additionally, you only have to submit your PAN card, address proof, salary slip and bank statement to be able to avail quick access to instant funds. 

Instant disbursals: With instant application process comes quick disbursals that are directly made to your bank account within a maximum of 24-48 hours of loan approval. Few lenders in India offer you funds just in few seconds that further make it simple for you to plan your expenses in a better way. 

How To Apply For A Loan From A Loan App?

You can download loan app as applying from a personal loan app may seem more hassle-free than applying from a traditional lender. However, the details and documents that need to be provided are essentially the same. You will need to specify your personal and professional details, enter the loan amount you require, complete KYC, verify your bank statement online post which the lender approves your loan application. Once the lender successfully approves your loan application, you will then have to proceed with submitting your additional details like your official email ID, office address, employment details and others only after which the loan amount is disbursed.

It is also important to note that different lenders in India follow a diverse application process that also offers you loan approval based on your psychometric test, social score, and credit score. While you may be aware of loan approvals based on the credit score that plays an important role in determining your credit eligibility, lenders in India also heavily rely on your social score i.e. the score generated based on your social behavior. 

Also, when applying for the loan through an application, you must pay close attention to details like principal amount loan tenure, interest rates, EMI amount, foreclosure charges, late payment fee, part payment fees, and other factors to ensure you don’t end up falling into a debt trap in the future.