Rahul, a customer service agent, thought he had the month’s expenses under control, with payday a week away, when an unexpected situation cropped up. There was a major plumbing breakdown in his apartment complex, and he was asked to shell out his share. He decided to borrow to resolve the problem speedily. He didn’t want to dip into his savings because he had only just started an emergency savings fund for a rainy day in the future.
Rahul weighed his options. He could pick one of the guaranteed payday loans or a pocket personal loan, available on Finserv MARKETS, which is a short-term loan. The loan amount ranges between Rs 10,000 and Rs 50,000.
Guaranteed payday loans are available online, and you can avail of them with minimal documentation on lending websites. Some of them are available as apps that can be downloaded for smartphones, as well. They are short-term loans, more on the lines of a salary payment made in advance, which don’t require collateral. They are apt for those who have a low account balance. They come with high interest rates. Typically, they are small loans and are lent on the assumption that the borrower will repay the same on payday, considering he or she is salaried. Payday loan tenures are extremely short; ie. the loan has to be repaid on the coming month’s payday — the tenures are often in the range of one to three months.
Unlike guaranteed payday loans, a pocket personal loan, available on Finserv MARKETS, comes with an affordable interest rate between ranging from 12 and 18 % per annum, making it a more sensible choice
Payday loans online are processed in quick time, and require very little documentation. Also, guaranteed payday loans don’t exactly need the borrower to have an excellent credit history.
Similar to payday loans, a pocket personal loan is a small ticket loan offered for tenures ranging between a single EMI upto three EMIs. The pocket personal loan can be repaid via ECS instruction to the bank, and will be deducted from your account automatically. Availing such a loan is paperless and a do-it-yourself process, thanks to a seamless online platform. Pocket personal loans are ideal for a month-end cash crunch and not for large-scale projects such as home renovations.
On the other hand, personal loans come with more tenure options, ranging up to 36 months. The loan amounts are also higher, when it comes to personal loans — the upper limit could be above Rs 30 lakh in most cases. Typically, personal loans are borrowed for wedding expenses, home renovations or travel.
Online lending has caught up in a big way in India over the past few years, simply because of greater internet access and the availability of smartphones. According to a 2018 BCG report on digital lending, digital transactions grew at 21 per cent in the 2018 financial year, while transactions based on branch, physical channels or paper dropped by 8 per cent.
The availability of short-term personal loans, pocket personal loans and payday loans online has meant more consumers are accessing them to tide over their financial emergencies. According to the Google India’s Year in Search report on search query trends, in 2018, personal loans constituted 75 percent of searches on mobile in the Banking, Financial Services and Insurance (BFSI) sector in India. What’s even more interesting is that 57 per cent of all personal loan queries come from non-metro, non Tier 1 cities. The Reserve Bank of India’s (RBI) data shows that personal loans have gone up by 17 per cent in July 2019, as compared to a growth of 16.7 percent in the same period last year.
Considering the number of options, in terms of both payday loans online and short/long-term personal loans, borrowers have greater flexibility now to choose the one that solves their needs.
Had Rahul needed a larger loan amount, say in the range of Rs 15 to 20 lakh, a payday loan or a pocket personal loan wouldn’t have worked for him. In such a case, it would have been ideal to avail of one of the personal loan products, available on Finserv MARKETS, which would have let him borrow up to Rs 37 lakh. Personal loans can be availed with zero collateral, no paperwork, some basic documentation such as your PAN/Aadhaar and a three-month bank statement. You would be required to be a salaried professional in the 25-58 age bracket. What’s more, availing a loan online is effortless and can be done in a few minutes. When you opt for a Hybrid Flexi Personal Loan, available on Finserv MARKETS, you can make unlimited withdrawals and also have complete control over your principal, and choose to make repayments in a flexible manner.
In Rahul’s case, he just needed a super short-term loan to tide over a financial emergency. Rahul was confident that he could repay the loan once his salary got credited. A pocket personal loan, available on Finserv MARKETS, worked just fine for him, as it let him borrow anywhere between Rs 10,000 and Rs 50,000 without any paperwork. If you are in the 21 to 50 years of age, and live in a Tier 1 or 2 city, and are a salaried employee with a take home of Rs 20,000 a month, you are eligible for this loan.
In conclusion, there are several number of short-term personal loans, some of them super-short and called pocket personal loans, and payday loans online but as a borrower, you should assess your ability to repay realistically, your overall financial situation and your current emergency, before you pick a loan.
Also read what are the tax benefit on personal loans and how can you claim it.
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