8 November 2016 will be etched in the financial history of India as a landmark date. The bold demonetisation move leveraged the huge potential of the lesser-explored digital financial transactions in the country. A year later, the results of the historical transition are clearly visible in the economy.
We do not stand endlessly in queues at ATMs any more; not having that imperative Rs.1,000 note in circulation does not seem like a big deal too. The entire nation is embracing the concept of digital financial transactions like never before. Interestingly, digital transactions are being referred to in prime time television advertisements as well!
As we transition into a cashless economy, we have the government, banks, and retailers to thank for this remarkable metamorphosis. A lot of economic activities have been upgraded to the digital mode, and loans are markedly one of them.
The concept of paperless loans
Although paperless loans have been around for a while now, the demonetisation exercise has certainly given it that extra push. Banks and other lending institutions have joined the paperless bandwagon due to the clear benefits it offers to all stakeholders. The fact that it is environment-friendly is certainly an added bonus as well.
So how does paperless loans work? All you have to do is visit the official website of the financial institution or a neutral financial service provider and apply for the loan. You will be required to submit soft copies of your eligibility proof and supporting documents indicating repayment ability. This information is transmitted to the bank in real-time. The bank processes the application and provides an approval for the loan limit. Subsequently, the applicant’s bank account will be credited with the relevant amount. In comparison to the offline loan application process, the digital route does away with endless documentation, numerous visits to the bank, status check of the application, and other such hassles.
Paperless loans are different from pre-approved loans, as the latter is offered based on the personal profile of the customer without the requirement of any supporting document. In paperless loans, you will still have to submit the soft copy of the supporting documents.
Paperless loans are the future
personal loan eligibility check and application process takes only a matter of minutes now. Financial aggregator websites also have attractive user interfaces that make the process more engaging and effortless.
Apart from paperless personal loans, you can apply for car financethrough the online route as well. Watch out for special offers and attractive interest rates on car loans during the festive season, as you can benefit largely through such promotions.
Things to remember before applying for a paperless loan
It is important to do your fair share of research before deciding on a specific loan product. Financial aggregator websites enable you to compare loans between lenders and decide on their suitability. The experience is seamless as you can even proceed to make a loan application and get it approved in a paperless fashion. However, it is important that you read through the fine print before making a commitment.
Once you have made up your mind on the loan to apply for, you do not want to abandon your cart for lack of supporting documentation. So you should focus on getting the soft copies of all your supporting documents, such as ID proof, address proof, PAN Card, Form 16, bank statements, photographs, etc. before the actual loan application.
Another crucial thing to bear in mind is the commencement of your repayment schedule. In the case of paperless loans, the requested amount will be disbursed immediately. This implies that your repayment liability will start sooner than that for loans applied through the conventional offline mode. So you should have a robust repayment strategy in place before you even apply for the loan. Remember that defaulting on a loan can seriously affect your credit score and have a negative impact on future loan applications.
Added benefits of going paperless
- Security - The entire paperless loan application process is highly secure as websites offering the facility employ global security systems. This ensures that your confidential data is not compromised at any cost. So while executing a paperless transaction, you may even be safer than when you perform a similar transaction offline.
- Attractive interest rates on loans - Banks have also realised the immense potential that the paperless mode of financing has and are now advocating this mode by offering attractive rates on loans.
- Assistance throughout the journey - In case you are availing a loan through a financial aggregator, you will have to submit the documentation at their website. This will then be forwarded to the bank for approval. You will receive the assistance of the aggregator throughout the process.
Apart from loans, paperless insurance sales have also taken the financial retail sector by storm. With a plethora of online insurance products that insurance companies are lining up today, the customer is simply spoilt for choice. If you are looking to buy the best medical insurance plan in the industry, you need not look any further; what’s more, you can even protect your car through an auto insurance scheme with adequate add-on covers.
It is only a matter of time before we see every financial product being offered through paperless applications. Mobile banking is also expected to fuel the growth of this phenomenon.