Instant Loans: How Personal Loans have evolved from “Traditional” to “Instant” over the years

Bengaluru, May 21, 2018 (Issuewire.com) - Unsecured loans have evolved quite impressively over the last many years to become more easily available. While personal loans never had a prefix in earlier times, we find several prefixes today – Instant Personal Loans, Online Personal Loans, Easy Loans, and Digital Loans, among others.

The concept of instant loans has been popular in the West and developed countries for quite some time. Off late, with stable and steady economic growth, developing countries, India especially, are seeing instant personal loans penetrate the market more deeply.

Back in the day, even until five years ago, people were dependent on traditional financial institutions for loans – private banks or state-run banks. But things have changed quite dramatically, with several traditional players improving their services to provide quicker loans and the emergence of new players like Fintech companies who’ve given rise to prefixes such as Instant Loans and Digital Loans.

Qbera is one such Fintech Company that offers instant personal loans, with the provision of completing the entire application process online.

Let’s look at some points that have led to the evolution of personal loans from “traditional” to “instant”. But first, let’s look at what was and what’s different.

Where does the difference lie?

Let’s quickly skim through the differences.

Traditional loans involved long turnaround times and loans would sometimes take weeks to be disbursed. Instant Personal Loan, on the other hand,d have turnaround times spanning one day!

Long turnaround times rule out the possibility of the timely arrival of the money in the light of an emergency. Instant unsecured loans, however, have helped people better manage financial emergencies.

While traditional loans involved cumbersome paperwork and documentation, instant personal loans don’t require physical submission of documents. If you wish to apply for an instant loan today, it won’t take you more than 5 minutes.

Traditional loans focused heavily on the employment and income quotient – years of experience, minimum income, employer being listed after evaluation of credit, etc. Instant online loans on the other hand aren’t heavy on these parameters and go easy while approving applications.

Let’s move on and assess various aspects of the evolution process that gave rise to instant personal loans:

The need for easy availability

Ease of applying for a loan to make the customer experience seamless – one of the prime reasons why the necessity for evolution was first understood.

Over time, a personal loan has become one of the most popular types of loans in the market, with the number of people applying for loans only increasing. In order to make these loans more easily available, banks, financial institutions and Fintech companies have made the process more easy and seamless. Minimal documentation, digital verifications and same-day disbursals have become some of the most prominent characteristics of Instant Personal Loans.

The competition quotient

The competition in the loan market has been raging and merciless, one of the reasons why financial institutions are adopting smart and pragmatic tactics to capture a bigger share of the pie. And what better way to do it than to provide instant personal loans that reach the beneficiary’s account within one day?

While new market players (Fintech companies in particular) have already adjusted their tactics to suit requirements of the modern day, and even traditional lenders are trying to adjust their ways of practice to align with the tempo of current day dynamics - another reason why instant personal loans have become popular

Increase in demand and the need to cater to more people

It goes without saying that the dramatic increase in the number of people is another reason that has facilitated evolution.

Over 60% of the country’s population is between the ages 21 to 40 and the market presents humongous potential. The intention to capture a bigger share in the market cannot be understated – banks and financial institutions are constantly vying to augment their profits.

So, with the increase in the number of potential applicants, financial institutions and Fintech companies have altered their offerings to accordingly strike the cord with current day demands.

The need to reduce paperwork

Traditional loans involved massive paperwork that was distributed in several stages. As a matter of fact, even now, traditional loans involve paperwork, where documents for the loan are verified physically.

Unsecured Loans, on the other hand, have acquired the “instant” characteristic because of eliminating the burden of paperwork. Verification is done online – documents including proof of identity, residence and address are verified online, without having the need for representatives from the bank to physically collect relevant documents and attest authenticity of other related information.

The element of risk and to taking it

With the increase in population and subsequent increase in demand, individuals with substantially varying credit profiles tend to apply, everyone, having their own expectation. With the ever increasing and unforgiving competition, many Fintech companies have created and adjusted their risk model to give loans to individuals who are more likely to be rejected by large, traditional banking institutions.

While this has definitely increased the element of risk, it doesn’t necessarily do so, as the new risk profile that is being adopted has its own

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