In India, instant personal loans have become quite popular in recent years. The widening disparity between income and expenses, together with rising expectations among the Indian population, is to blame for the rise of small loan apps in the nation. Additionally, the Covid-19 pandemic-related factors of job losses and income reductions have fueled the Indian personal loan sector.
Personal loans also have a wide audience and excellent characteristics that make them readily available to the majority of Indians. Additionally, the recent drop in borrowing costs and increased accessibility of online lending have had a favourable impact on the personal loan sector.
According to recent RBI updates and publications, personal loans now account for a significant portion of all bank credit. Moreover, the personal loan market has been expanding at a strong and consistent rate over the past five years, thanks to some of India’s best loan applications that provide simple and rapid modest loans.
Tracking the Growth of instant loans in India
- According to one RBI report, personal loans will make up 28% of all bank credit by 2020.
- In the most recent years, unsecured lending to young people has grown significantly.
- Both personal loans and loans for durable consumer goods expand at the same rate. Fintech lenders offering loans either through collaborations with current banks or NBFCs is one factor contributing to this increase. Customers now find it simpler to obtain an unsecured loan at reasonable rates without going to the bank.
- In March 2020, female borrowers held about one-third of all loan accounts, down from about one-fifth during the previous few years.
- Personal loans climbed by 28% compared to 33.5% growth over the same period the previous year, even though bank loan accounts expanded by 17.3% in 2020, indicating an increase in bank lending the prior year.
- The average ticket size for personal loans provided by NBFCs has decreased as a result of the rise in loan volume.
- 37% of the personal loan applications submitted by clients who used a personal loan for medical or health care situations were included in the 28% increase in personal loan accounts in 2020.
- Most borrowers of personal loans were able to keep their liquidity of funds while they had loans on them, thanks in large part to the moratorium period that banks provided.
Reasons why instant loans are becoming popular in India
- Convenience
Many banks, NBFCs, and online lenders will accept your online application for a personal loan. Additionally, when you apply for a loan online, the majority of loan applications and websites display the most loan amount you are eligible for based on your monthly income. You also have the choice to upload your documents online. Once your loan application has been approved, the loan money is immediately sent to your bank account after deducting the processing fee.
- Simple application, approval, and disbursement processes
Personal loans were previously granted by Indian banks and lenders far too slowly. Even after waiting for days on end and submitting a tonne of documentation, there was no assurance that a quick loan application in India would be approved and that funds would be disbursed on schedule. However, since the introduction of online lenders like PaySense, obtaining a rapid loan using a small loan app just takes a few hours or less. To submit a loan application online, go to the website immediately. Then, in a few minutes, your papers can be uploaded.
Additionally, the loan amount is quickly put into your account after your loan application is approved. The entire process—from loan application to disbursement—takes place online. You can apply this way without ever having to meet with your lender and receive your loan amount. Additionally, thanks to the quick loan disbursal, you can readily take care of your urgent demands.
- There are no use limitations
The main advantage of instant loans is that they can be used for any purpose. With home loans and auto loans, which can only be used for a specific purpose, this is not the case. A personal loan can therefore be used to meet any financial need, unlike a home loan, which can only be used to buy real estate, and a car loan, which can only be used to buy a car. A personal loan can be used to cover expenses like travel, home improvements, new furniture and appliances, wedding costs, unanticipated medical costs, schooling, purchasing a used car, etc.