In fact, getting a personal loan is now easier and faster than ever. The main reason behind this is the advent of digital technologies in finance. When a bank gives you any loan, it does a background check on you to see your details and particulars and whether you will be able to pay back the loan. Earlier, that process would take days, now it happens in a few minutes of time.
Here, it is important to understand how instant personal loans work. First, is the concept of KYC. Know Your Customer (KYC) helps a bank to identify you and verify your details.
Once a bank or a lending institution has your KYC information, it can determine your source of income and other required financial details.
e-KYC
Earlier, the KYC process would require submitting physical documents at a branch which would include the address proof, income proof, bank statement and so on. This would be a cumbersome process with long queues, filling up many documents and often waiting for weeks or even months to hear back from the bank.
But now the KYC process happens online in minutes and is known as - eKYC.
In e-KYC you do not have to submit your physical documents and can just scan and upload them online followed by an OTP-based verification of your identity. Banks and lending institutions have sophisticated software at their end to do the verification process, hence the KYC verification can happen almost instantly.
However, the e-KYC process has some limitations and is considered a half-KYC process. With the introduction of video KYC, full KYC is also possible digitally, but it is not a requirement for availing a personal loan.
Aadhaar
All of us have been irritated by messages which ask us to link our Aadhaar to our bank account. However, that has made applying for a personal loan even easier. If your Aadhar is linked to your bank account, you just have.to fill an online application form and give your Aadhaar number and upload some basic documents like address and income proof.
Since Aadhaar is linked to your PAN and bank account, the lending institution can verify all your details and disburse funds in your bank account in a day or two or even sooner.
Know more on Aadhaar PAN Linking
Pre-approved Personal Loan
Such loans are only given to select customers who already have a relationship with the bank. It requires very little documentation, as the bank already has the details of the customer.
Know more on How to apply for a Personal Loan?
Conclusion
Digital financing has made getting a personal loan much easier. However, a word of caution - go for a personal loan only if you really need one.
