Data suggests that personal loans have continued to grow steadily and have recorded a 13.5 % year-on-year growth in March 2021. This has been consistent for a few years now. And the primary driver of personal loan financing is personal loan apps. Let us learn how online loan apps are fueling the consumer lending industry in India.

How online loan apps are owning the consumer lending industry in India

Factors like digitalization, demonetization, and then Covid-19 have pushed the use of apps for making monetary transactions. New-age digital consumers and initiatives by the government have paved the way for a robust digital economy. These radical changes have led to a massive transformation in the way we access different banking services today. 

The process of lending has evolved immensely to facilitate easier discovery as well as hassle-free processing of loans.

Also, the Indian government launched India Stack, which is a set of open APIs like eKYC. It allows finance companies to perform the KYC verification digitally using mobile OTP or biometrics. eSign also enables applicants to sign and submit documents digitally. Such technological advancements have given a considerable edge to the alternative lending segment in India. 

Because of digitization and such initiatives by the government, digital marketplaces connecting lenders to credit-seekers are continuously enhancing the efficiency of the lending process. As a result, online loan providers are making availing of a loan seamless, quick, and paperless for consumers.

Advantages of paperless personal loans

Below are some of the advantages of paperless personal loans:

  1. Paperless transactions and online loans are the future of banking. The fintech market is fueled by a relaxed regulatory environment and the latest cutting-edge technologies.
  2. Digitization of end-to-end lending processes eliminates the possibility of human error. The processing of applications along with credit underwriting is overseen using technology.
  3. Again, the absence of any mediators makes online, paperless loan processing much more convenient and dynamic for borrowers with urgent financial requirements. 
  4. Moreover, the new-age digital lending processes do not have to go through the hassle of slow, bureaucratic methods. 
  5. With online loans and alternative lending platforms, borrowers can apply for a loan anywhere, any time. Borrowers can get the loan irrespective of the lending bank being in their geography.

The working of paperless personal loans

With efficient technological solutions and digital tools like a set of open APIs and India Stack, online lending platforms have joined hands with NBFCs and banks to formulate efficient lending solutions for borrowers. 

For greater accuracy in customizing loan products, the digital lending platforms employ data analytics and AI algorithms that comprehensively analyze loan products offered by lenders like banks and NBFCs. The algorithms correlate loan products to the specific borrower requirements and pick a suitable loan product for borrowers.

Below are some of the features simplifying taking a digital personal loan:

  • Online loans are easily accessible

You can apply for a personal loan online if you have access to a laptop or smartphone, internet, and government-approved IDs like an Aadhaar card, PAN card, or voter ID. With the online application process of digital lenders, borrowers can fill in their basic details and upload their documents over an online portal. 

Borrowers must scan and upload their documents online, such as identity proof, address proof, salary information, bank statements, etc. This is a one-time process and lending platforms store the applicant’s data in a centralized database securely. Lenders can access this information when borrowers want to again avail themselves of credit or any other lending services. 

Deep analytics and automation have made the borrowers’ verification and credit assessment much more straightforward, faster, and considerably accurate than before.

  • The digital signature feature allows applicants to e-sign

With the digital signature feature, applicants can e-sign their loan documents easily. This makes the entire transaction completely paperless and saves the trouble of downloading and filling up a physical application and sending it to the lender. 

Also, with paperless online loans, borrowers need not visit the bank as the entire process from credit application to disbursal is conducted through digital channels.

9 things to keep in mind before availing of a loan online

Keep the following things in mind before availing of a personal loan digitally:

  • Choose only a genuine and reliable online credit provider. It is hard to evaluate a brand’s credibility just by looking at its website or app. Instead, visit review websites to learn about the customer’s good and bad experiences with the brand. Another good way is to ask your friends and family members who have used online loan apps to take personal and consumer durable loans. When you go with a known online credit provider, you can be stress-free.
  • Do in-depth market research before choosing a digital credit provider. The online credit market in India is dynamic and highly competitive. So, it is crucial to go through multiple loan app options and choose the one that suits your needs best. By doing thorough market research, you can get the best interest rate and an opportunity to customize your online credit plan as per your needs. 
  • Understand what your financial needs are. It is critical first to evaluate your needs for credit. Only then can you decide on the form of credit that will be most suitable for you. For example, you have options like an instant personal loan with a low-interest rate or a credit line.
  • Make timely repayment of any previous loan taken. Mounting debt is a terrible thing. It can push you into the debt trap and crush your financial health. Also, a mounting debt impairs your future credit opportunities as it adversely impacts your credit score.
  • Understand your financial position before taking a loan. It is not the smart thing to avail credit just because you are eligible for it. You must first ensure whether or not, in the long run, it will be economically feasible for you. Use personal loan EMI calculators and other tools and information available online to make an informed decision. Then, make a financial plan per your current income.
  • Do not avail online credit for deferrable impulse buys. You might want to buy an over-the-top car or go on a luxurious holiday. But you must ensure to plan them in a way so that you do not entirely fall back on personal loans. You must fund such buys partially through your savings.
  • Follow all the security protocols. While taking online credit or making any online transaction, follow all the security protocols and stay aware to not become a victim of identity theft or online fraud. While applying for a loan, use a personal laptop, a secure network, and make sure not to visit any suspicious sites that may compromise your digital profile.
  • Go through the fine print of the lending agreements. Terms and conditions levied by different financial institutions may vary. Analyze the fine print well to know all the essential things about the loan you are taking. Then, factor in the conditions while checking the feasibility of your online credit.
  • Be on the lookout for loan offers. Online credit lenders occasionally offer incentives, extra discounts, or festive offers on their credit options. Look for such offers while availing of personal loans to save some extra money.

The points listed above can certainly help you make your online credit experience safe and better, but the list is not entirely exhaustive. There is no substitute for general knowledge and common sense. Ensure to factor in all the required precautions while availing of online loans to fulfill your big and small needs.


Gone are the days when it took months to get a loan disbursed into your bank account. So, do away with filing personal loan applications with banks and transact with the future of consumer lending. 

Get instant loan approvals with online loan apps and receive the funds in your bank account in a matter of days. With the evolution of paperless personal loans and digital lending, it has been easier for salaried and self-employed individuals to get loans. 

Even individuals with a poor transaction history or low credit score can avail of personal loans and consumer durable loans with online loan apps.

Anil Sumra

Anil Sumra is a Digital Marketing Expert with more than 10 years of experience. He loves to write on various financial topics online to create financial awareness. He holds a bachelor’s degree in Finance & Management.

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