Friday, 28 September 2018

Difference between online personal loan and traditional bank loans

In the internet times, everything is fast. Somehow, somewhere the patience is decreasing. But, there are things which are happening at the lightning speed! So, one has to be fast. Now, while speaking about the speed of everything, the time required to achieve the dream has also decreased. The time of getting the credit which helps in achieving the dreams, in taking a new house, taking a car, going for that vacation, having a perfect wedding, starting a new business now is easier. But, it’s not about only getting the loan or the credit approved. It is also about how irresponsibly on handles it!

There are different reasons why an individual requires a loan. While home loans and car loans or education loans are specifically designed for those specific needs, a personal loan has a wide range of needs. Marriage, travel, medical emergency, house repairs, small business needs and many more are the reasons why one wants to apply for the loan. With many of the banks, HDFC personal loans are the ones which are a little popular once. Applying for a loan is also faster and easier these days. With online options coming into the picture, applying for loans now happens on fingertips. The online application takes less than five minutes. There are few of the sites that assure you the loan approval within three minutes. All that one has to do is submit e-copy for the documents like aadhar card or election card, PAN card, credit score if known. And it’s done.

However, while comparing it with traditional bank loans there is one major difference. An online personal loan when applied for does not promise a bigger amount that can be sanctioned. For smaller amount loans, they are good. But, while talking about traditional bank loans, depending on an individual’s credit history, credit score and the earning, the amount that can be approved can be bigger. Applying online for the loan may face a few complications. Sometimes even after the approval, as there would be some documentation errors, it can get canceled. While in a traditional loan, this can never happen. If the cibil score is below average, one can also apply for Loan for low cibil score. Online personal loans work amazingly for this. The percentage of interest is higher, but a small amount as 50000 or 100000 is approved instantly. While is an urgent need of funds, this would help greatly.

Either online personal loan or traditional bank loans, the credit bureaus work in the same way. One has to make sure that the repayment is done on time. The credit score is affected in the same way in either of the loan types. If missed or delayed payment, the score drops. It is important for an individual to understand the responsibility of the credit that is taken. A credit score is now not only checked at banks or NBFCs while applying for loans or credit cards, while taking jobs, applying for visas, going overseas, the score is checked everywhere. A Single goof up, and the score dips and all these things get affected.

As described, online loans are faster and are available at an easy and faster speed. One of the reasons it is so popular is the smaller amount that can be approved along with the easy disbursal in the bank account. While the traditional bank loans may take time but a huge amount seeing the conditions can also be approved. Loan for the low cibil score is also approved in either of the cases, but that does not imply that one stops caring about the score. Working on the score and taking a small loan in repaying the older debts can also be a good option!

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