Digital lending has become one of the most popular Fintech trends in recent years. It refers to the process of applying for, paying for, and managing loans using digital media. Lenders are increasingly turning to digital data to help them make loan decisions and build strategic customer loyalty. Due to advancements in digital lending, the Fintech sector will also provide better services to impoverished people in a more timely, cost-effective, and appealing manner, making it a very productive instrument.
 
Despite the fact that online personal loans are growing more popular, many consumers still prefer traditional services. Personal loans obtained offline cannot compare to the ease of personal loans obtained online. As a result, online personal loans are becoming increasingly popular among city workers. Because of the rapid expansion of the digital marketplace in India, the majority of lenders are expanding their operations in other regions. That is why, online personal loans are preferable to traditional personal loans, and they are projected to grow more common in the future. Mahesh Shukla, Founder & CEO, PayMe India, shares in knowledge on steps to keep in mind while taking personal loans online:-
 
• Evaluate Diligently- Despite how convenient digital loans are, it is vital to use them wisely to improve your financial situation rather than simply acquiring products you want and then struggling to pay the EMIs. Before asking for any loan, you should ask yourself, "How much do I need?" and "How much can I afford?"
• Check to partner NBFC & their RBI Registration-  To issue loans, almost all online lending apps work through a non-bank financial institution (NBFI). It's critical to be aware of the participating NBFC and to double-check the information on the RBI's website.
• Read Terms Beforehand- Check to see if the essential terms and conditions are stated upfront, such as interest rates, processing fees, prepayment charges/penalties, length, repayment method, and so on.
• Watch Out for Hidden Fees- Examine properly how processing costs, prepayment penalties, foreclosure fees, GST, and other expenses work. All of these costs aren't needed to be mentioned beforehand, so read the agreement cautiously.
• Check before sharing documents- During physical KYC verification, make sure the executive has the proper identification documents to prove the lending institution's legitimacy. To avoid identity theft, do not reveal any important documents until the verification has been finished.
• Maintain High Credit Score- Along with your income, having a good credit score can help you secure a personal loan online with the interest rate and term you want. This is because a low credit score indicates a bad repayment history, making banks wary of issuing you a loan. As a result, it's vital to pay off all of your obligations and unpaid credit card payments before applying for a new loan.
 
Dos to remember when applying for a personal loan online, as per Mahesh Shukla
 
• Verify the credibility of the lender - Before applying for or accepting a loan from any source, it is critical to check the lender's credibility. Always check to determine whether the lender has been approved by the Reserve Bank of India (RBI) and has a strong lending history.
• Read and understand the fine print – Before making any decision, always read the fine print of the terms and conditions, as well as the privacy policy.
• Investigate, assess, and then make an informed decision- Before choosing a lending option, compare interest rates, loan terms, loan length, and repayment options. Select the best financing plan for your requirements and financial position.
• Keep a good credit score – The creditworthiness of a borrower is crucial in the loan process. People with a good credit history or a high CIBIL score are more likely to be approved for a loan.
   
Don'ts to remember before taking a personal loan online, suggested by Shukla
 
• Say, 'No' to unofficial sources – As the popularity of the internet has increased, so has the number of online cheaters and fraudsters. Keep an check on non-verified loan applications that ask for personal information like your address, PIN, bank account number, and account number.
• Avoid taking out many loans at the same time – Taking out many loans at once raises your risk of default, which can harm your credit score and make getting future loans more difficult.
• Look beyond interest rates -Interest rates are an important part of the research approach, but it's not the only item to think about. Pre-payment fees, processing fees, and pre-closure fees should all be taken into account because they may make a tiny difference in the end.
 

"No doubt that there was a rise in online fraud during the COVID-19 outbreak. However, taking out a personal loan online is a wise move since personal loans from online lenders are just as safe as loans from big banks as long as the online lender is reputable. A competent lender, whether online or offline, would generally evaluate your credit before processing your application, expose the loan's rates and terms, and assure that the loan would not damage your finances," he concluded.

(Disclaimer: The views/suggestions/advice expressed here in this article are solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)