Online Personal Loans vs. Traditional Bank Loans: Which is Better for You?


It has become easier than ever to apply for Personal Loans because of technology, which has become an integral part of lending practices. India is home to numerous financial technology companies, who have had a role to play in disrupting the Personal Loan industry.  Applying for online Personal Loans means instant approval and paperless processing. However, this does not mean that you should avoid traditional bank loans.

In fact, you should weigh the pros and cons of online Personal Loans and traditional bank loans and then make an informed decision.

Traditional Bank Loans

For decades, banks have been providing loans to consumers and businesses and helping them tide over when financial difficulties strike. Bank officials have to follow fixed procedures to approve or reject loan applications. That is why when you apply for a Personal Loan, you should be prepared for it to take a few days before you get approval. In case, you need money urgently; it may not be the best option.

Borrowers have to meet loan eligibility criteria to get approval, and you can Apply for a Personal Loan Online through a bank’s website, you may still have to visit the branch to fill out a physical application and submit photocopies of the relevant documents. It is terrific that banks have these procedures, and it reinforces the faith that people have in the banking system, but for those who want access to funds quickly, it can be stressful.

Traditional bank loans require collateral, and if you are unable to pledge your asset, it can be difficult to get approval for the loan.

Online Personal Loans

Online Personal Loans are easier to apply and relatively hassle-free. The loan application is genuinely online – you can apply for the loan online without having to visit the lender’s office. It hardly takes a few minutes or hours to get approval. Once the lender approves your loan, it takes a maximum of two business days for loan disbursal. So, it is the ideal solution for those looking for money to help with an emergency.

Online lenders require minimal documentation. You can submit everything online, be it your bank statement, Aadhaar card copy, identity proof, or salary statement. It is a simple, convenient option for borrowers, as they can apply for a Personal Loan online from anywhere and anytime.

These Personal Loans are collateral-free. You never have to pledge your property or assets to get the loan. Lenders approve loans based on your credit history and ability to repay the loan.

Online financial services providers do not have the same overheads as traditional banks. Hence, they offer attractive interest rates and flexible repayment terms. They help minimise the burden of repaying, and this has allowed them to capture a significant share of the online loan market.

Which is Better for You?

Ultimately, the choice between traditional bank loans and online Personal Loans is, well, personal. If you want access to instant funds, you will be better off applying for the loan online. On the other hand, if you are okay to wait for a few days or weeks to get the money and you have the necessary collateral, traditional bank loans may be the ones for you.

If you are seeking online personal loans, get in touch with the financial experts at MyMoneyMantra. They will understand your financial situation and objectives and accordingly recommend options that are perfect for you.

Also Read: HDFC Personal Loan for Paramilitary, Railway & Defense Personnel

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