Tired of applying for personal loans, but no luck? Did you take a pay-cut this month?

Whatever may be the reason, more and more people, from all age groups are turning to instant loan apps these days for their urgent requirement to fund personal expenses. Digital lending is a reality that’s transforming the credit scene in India in a rapid pace. All you need is a smartphone and working internet to download the app.

Good or bad, it has revolutionised the fintech sector by making borrowing easier than ever.

Lending from apps began in 2019 and, since then, the issue has made headlines several times with loan frauds, rackets, the RBI raising red flags and removal of lending apps from Google Play Store. However, with the RBI set to create aworking group to control the digital lending aspect and some apps getting theNBFC approval, things are indeed looking brighter.

Let’s see what these loan apps are from the viewpoint of an average Indian youth. Sameer is left with any money in hand after addressing his monthly expenses and savings. When an unforeseen situation broke out, he found himself helpless. He was denied a personal loan from a couple of traditional banks because of his fixed obligation to income ratio. He had the only option to apply for a loan against his credit card, but he didn’t indulge the thought because of higher interest rates. At 30, he was averse to borrow from his friends or relatives.

Instant loan apps drew his attention at this juncture. He spotted an advertisement on a social media platform that promised loan disbursal in just one hour without any income proof. He immediately installed the app, filled up his basic details, uploaded his KYC and, he was approved a credit line. He was free to borrow any amount from this credit line for a certain period. That was a sigh of relief.

The loan approval through these apps are far faster compared to the traditional lending process through physical banks. The entire process is hassle-free compared to the existing system. And, the experience is smooth.

Sameer didn’t have to face a problem and the journey was a smooth sail. But many like Sameer have suffered as the apps secure access to almost every detail of the borrower from the phone, including the contact list, photo gallery and messages. In case of a default, they use this access to send out threat messages and also spread out a debt trap for the borrower, driving him from one loan to another to pay off the first one, and so on.

Let’s take a look at the various features of the instant loan apps.

● Get short-term loans that can range anywhere from 1 month to 5 years (based on the app).

● The credit line can be anywhere between Rs. 9,000 and Rs 5 lakh (based on the app).

● Can be easily applied from the comfort of your home or while at your workplace.

● Paperless loan application that can get approved in as low as 4 minutes.

● Pocket-friendly EMIs with a suitable tenure to choose from.

● Instant approvals and disbursals with the freedom to access the credit line at your convenience.

The instant loan apps have no strict lending policies as compared to the banks and, hence, they are borrower-friendly, especially for those applying for small loans. Minimum documentation and e-KYC facilitate quick loan approvals and disbursal, saving the borrower a lot of time.

Unlike the traditional lenders, the instant loan apps use your ‘Social Worth’ that helps them analyse your credit profile and based on that they can quickly approve a credit line. This eliminates the longer evaluation periods based on your credit score analysis, loan history, tax filing and so on.

Despite the frauds and scams, the instant loan apps sector is still in a nascent stage and needs a lot of credibility to gain consumer’s trust. But there’s no denying that it’s a digital revolution that’s disrupting the world of personal loans. Good or bad, instant loan apps are the fintech players that have changed the loan process.

The author is a technology columnist