The dynamics of the finance industry are constantly evolving in response to changing consumer needs and innovations. This has given rise to the current trending term “digital personal loans”. What are these loans and how are they different from traditional bank loans? Keep reading to find out.

Related: Why Small Businesses in India Are Moving Online?

The digital world has taken the steering wheel, and the finance industry is not far behind in leveraging this shift. The traditionally offline process of securing loans has transitioned to an online service where people complete the entire process digitally — right from the application to its disbursal. This has given rise to digital personal loans.

A digital personal loan is a type of personal loan that is applied for, processed, and disbursed entirely online, without the need for physical paperwork or in-person visits. Technology is at its core to make the borrowing process faster, more convenient, and accessible from anywhere.

An offline personal loan, or a traditional personal loan, is the traditional way of taking out a loan where you have to visit the bank branch to complete the process. You will have to submit the hard copies of all the required documents in the bank which takes a significant time as compared to the online process.

The traditional route to take out a loan is complicated and takes longer processing time, but people who want face-to-face interaction with personalised services prefer this over a digital personal loan.

Technology has made the process of taking out loans simple, quick, and effective. But this does not mean that it doesn’t come with disadvantages. Below is a list of all the pros and cons of taking a digital personal loan:

• Convenience with Speed: Taking a personal loan online is convenient and quick. No more waiting in long bank queues for a simple loan. Get hassle-free approvals in your bank account within a small amount of time!
• No More Lengthy Documentation Process: With the streamlined process online, loan approvals are just a few documents away. Reduce paperwork with minimal documentation.
• Disbursement of Loans from Anywhere: Another advantage of a digital personal loan is the flexibility. So, you don’t have to work according to the bank’s timing. Apply for a loan from anywhere and at any time.

• the lack of face-to-face interaction. This might not be a big deal for many, but some still prefer having personal interactions before taking out a personal loan.
• Concerns for Security: With the increasing usage of technology also comes the disadvantage of increased cyber crimes. Applying for personal loans online is a pretty safe process. If you stay aware and apply only on genuine RBI-approved NBFCs, then you are good to go. Despite the general safety, the concern for security still haunts many.

• Trust Factor: Banks have been in the business for long and people have a trust factor attached to the traditional method as compared to the new digital-savvy way.
• Personal Interactions: For everyone who prefers dealing with people offline while taking out a loan, the offline personal loan is a preferable option.

• Less Customisation in Services: Traditional bank loans are often less flexible when it comes to offering customised services.
• Strict Requirements: When it comes to getting a loan the traditional way, banks take the stricter route in terms of credit scores.
• Lengthy Approval: As opposed to digital personal loans, the approval and disbursal process of loans is complicated and tedious with traditional banks. You may even have to submit hard copies of your documents.

Digital and offline personal loans differ primarily in how you apply and receive funds. Digital loans use online platforms or apps for loan application and disbursement, offering speed and convenience, while offline loans require in-person visits and more traditional paperwork.

While the choice of your preferred method for taking a loan depends on your personal preference and comfort, we hope this blog provides clarity about which direction to take.