HYDERABAD: When Deepthi K, a software engineer, came to know of a wedding in her in-law’s family 15 days ahead of her salary day, she was in a fix. Neither did she have the money needed for the wedding nor the time to apply for a bank loan and go through a long paperwork process. Pressed for time, she approached a city-based start-up instead and got the entire amount of Rs 3 lakh within two days.
Many young professionals like Deepthi are turning to start-ups in the ‘alternative lending’ sector to tide over their monthly cash crunch. From ‘payday loan’, which is an early salary that professionals can apply for using their payslips, to personal loans and purchase loans, these start-ups are known to offer ‘micro loans’ starting from Rs 5,000. Unlike traditional banking and finance institutions, these start-ups also take care of all the paperwork and disburse the cash in less than three days.
“Since my job keeps me busy through weekdays, I do not have the time to visit the bank and do all the paperwork. That’s why I decided to apply online. When I applied for a personal loan of Rs 3 lakh on Apna Loan Bazaar, members of the start-up visited my office to collect all the details required in the documentation process. The cash was disbursed in just two days,” Deepthi said.
The fact that these start-ups offer loans for any purpose — be it for purchasing a new home or a new mobile phone or to simply travel — has made these short-term, high-interest loans popular among young working professionals.
Anish T wanted to travel to Thailand right after he quit his job at a finance firm in December last year. “Banks always check if you have a steady income or not. Since I had just quit my job, I thought it best not to approach a bank. Bank officials are also known to ask bizarre questions and sometimes the loan does not get sanctioned on time. This is why I decided to approach Lendsmart, a lending start-up, to obtain a loan of Rs 1 lakh,” he said.
According to Naveen Kumar Velpula, founder of Apna Loan Bazaar, ‘payday loan’ is the newest trend in the city. “As far as young professionals are concerned, running short of cash before the end of the month is a regular affair. Also, applying for a loan in a bank is a tedious process. The convenience that start-ups provide is the main reason micro loans and payday loans have become popular,” he said.
Asked about the security checks they do to ensure they get their returns, Velpula said, “While we offer unsecured loans, we run a telephonic verification to identify defaulters during which the customers have to reveal their civil overdue, if any. In case of customers with pending dues, we give them advice on how to pay those off first before applying for a new loan.” His start-up startup is now working on a ‘same-day disbursement’ process for personal loans.
personalloan – BingNews