Do and not apply for a loan on digital platforms-Ranvir Singh

Fintechs have made the sometimes tedious loan application process noticeably easier and faster. It is not necessary to carry x number of documents and speak to several people at the local bank branch. Instead, one can complete the process in a matter of minutes online. Once the KYC documents are approved, getting the loan also only takes a few minutes. These amenities have become essential in an emergency, whether for professional, educational or personal purposes.

However, convenience and efficiency cannot outweigh safety. Like any financial transaction, a digital credit application must be made after due diligence. Carelessness can become too costly, jeopardizing its financial stability. Here is a list of easy dos and don’ts to follow when applying for a loan through digital platforms.


  • RBI Registered: At a minimum, verify that the application is linked to a non-bank financial corporation (NBFC) lender registered with the RBI. Registration means that the business meets regulatory standards, including privacy and data collection standards, set by the regulator and does not overload or violate the law. This information should be available on the website and the app.
  • Compare and Select: With so many booming fintech companies, the customer needs to research thoroughly the different options available. Take a close look at interest rates, comparing them to loan terms and repayment options. In particular, the interest rates and the duration of the loans are the deciding factors. Fintechs offer a definite advantage for making quick comparisons.
  • Check App Store Ratings and Reviews: The App Store may be the best place to get customer feedback. One can read genuine user reviews with a convenient rating system, providing a quick overview of different areas such as usability, customer service, reliability and other critical factors.
  • Add EMI to the Emergency Fund: An emergency fund is the backbone of any personal finance plan. To ensure that there is no default in a crisis, it is a good idea to add your EMI to the emergency fund. Ideally, it should support 3-8 months of spending, depending on your ability and spending habits.
  • Check the eligibility criteria: Fintechs are generally seen as a more convenient option for getting loans. But like any other financial institution, they will be strict about their eligibility criteria. It is always advisable to check these conditions before applying for a loan.
  • Read the fine print: Legally, a fintech company is required to put all terms and conditions on their website. Review the fees, terms, and conditions charged by the business (especially for defaults or late payments) before applying for a loan.
  • Customer Service: Check the responsiveness of the company’s customer service team on social media and online portals. In the event of an incident or complication, they should be able to provide quick solutions to their customers.
  • Calamity Relief: COVID-19 has raised awareness of the need to guard against calamities. Check if the lending platform has a provision to provide some form of monetary relief for repayment in the event of an unavoidable national calamity. Some companies offer refund extensions, such as a moratorium, to customers who cannot refund due to special, pre-specified conditions. The availability of such relief can also help protect its Cibil and Credit ratings in the event of default.


  • Avoid physical delivery or cash payments: The goal of digital lending is to avoid physical delivery of documents or money. Never hand over your physical documents or refund money to an agent claiming to belong to that company. Always upload your documents and reimburse through the company’s official app or website.
  • Sharing Personal Information: Never share OTP, banking, or personal information with an agent. Most fintech companies have two-step authentication processes that are clearly defined.
  • Avoid Default: As with any loan, not paying back on time will negatively impact credit and CIBIL scores, hampering any chances of receiving a loan in the future. If there is any problem, it is recommended to contact the company before the due date instead of defaulting on the payment.
  • Ignore Repayment Terms: Most people tend to ignore the fine print, especially for repayment terms. You can browse the terms mentioned in the sanction letter and welcome letter sent to you on NBFC letterhead upon approval and disbursement respectively. Check in particular the fees and charges that will be levied in the event of non-payment or late payment.

With their ease of transaction, fintechs are the future. Sooner or later, most of us might end up applying for a loan on these online platforms. Hence, you are strongly advised to follow these Dos and Don’ts when applying for a loan online. A little diligence in the beginning will save you from a costly mistake in the future.

Disclaimer: The opinions expressed in the above article are those of the authors and do not necessarily represent or reflect the opinions of this publisher. Unless otherwise indicated, the author writes in a personal capacity. They are not intended and should not be taken to represent official ideas, attitudes or policies of any agency or institution.

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