In the current financial climate, where savings are yielding little value every year and investments are not generating enough to even cover inflation, many are seeking options such as credit cards, easy loans, and low-interest credit options to fund their needs and wants. One such convenient option in recent years, with lax eligibility criteria and instant credit availability, is loan applications from NBFCs like Stashfin.
However, despite the ease and convenience of obtaining loans from mobile loan app, it is crucial to understand various key factors, including loan terms, interest rates, processing fees, pre-payment penalties, eligibility criteria, and more, before making a decision. Here is all you need to know.
How Do Mobile Loan Apps Work?
In India, mobile loan applications can be from both registered NBFCs and Banks, which offer easy credit of smaller amounts to borrowers without having to go through a complicated process of loan application in the traditional manner. These low-value loans have become a staple in the Indian economy in recent years, serving as a key promoter of financial freedom by providing users with easy and instant access to funds to deal with small unexpected expenses or emergencies.
These apps can be downloaded from various app stores, including Apple App Store or Google Play Store and are verified by the app store as well as the Reserve Bank of India for functioning in India. After downloading the app, complete your KYC to view your loan eligibility, check the interest rate, and request the amount you need. You'll receive the funds in your account within a few hours, making the process more convenient and easier.
Why Should You Get Mobile Loan Apps?
Getting a loan app is beneficial in several key ways, ranging from an entirely online, paperless process to quick approval. You can apply from anywhere at any time using the user-friendly apps and avail flexible loan amounts which are perfect for emergencies, no matter the need. As these loans are unsecured, they may have higher interest rates but do not have any strict credit requirements compared to banks, offer quick disbursement, which can be used anywhere, and do not require putting up any security such as a home, gold, or other assets.
What are Some Things to Know Before Taking a Loan from a Mobile Loan App?
While it may seem easy enough to choose a loan app based on just advertising, it is critical to know a few key aspects before taking a loan from a mobile loan app. Here are some essential things you should know when planning to get a loan from a mobile app:
- Avoid multiple loan applications all at once, as it can result in multiple credit checks from different lenders, which can lead to a reduction in credit score.
- Compare lenders and loan options to find the one that best matches your needs and doesn't put you under financial strain.
- Check the interest rate offered to avoid high interest rates.
- Check for any additional charges, such as app fees or hidden costs.
- Check the loan term and understand the relationship between EMI and loan duration. A longer loan term leads to higher interest payments but lowers the EMI to make the loan more affordable. Which is why checking it and understanding its implications is critical.
- Make sure the app provides you with the amount you need. For example, if you require a loan of ₹ 4 lakhs but the lender app only offers loans up to ₹1 lakh, it doesn’t make sense to approach them in the first place.
- Compared to banks, these online apps often charge more interest due to higher risks associated with unsecured loans.
- As getting an online loan is easy, taking too many loans can lead you into a debt trap, so borrow only what you need.
- Always use a loan EMI calculator to the check the interest rates and EMI for your specific loan.
- Read the loan details like EMI amount, late fees and duration carefully.
- Set reminders or auto-pay so you do not miss any EMIs.
- Consider getting loan protection insurance along with your loan
Conclusion
Mobile loan apps like Stashfin have revolutionised the lending ecosystem, making them a viable option for borrowers of the modern age, where credit is more than just a tool during times of need, but a financial enabler, allowing them to focus on their dreams without having to worry about having the initial capital for it. Explore the various loan options available and choose the best one for your specific needs, meeting your current requirements while also dreaming beyond them.