How to apply for a loan online?

The fintech industry has made the lending process easier, faster and simpler, replacing the cumbersome financial practices of traditional financial institutions with technological intelligence, sophisticated algorithms, complex analytics and machine learning.

A simple online loan application, no collateral requirements and disbursement of funds in less than a week has greatly improved access to funds. The system-driven processes have not only increased transparency and convenience, but have also made it viable to offer loans ranging from as low as Rs 2 lakh to as high as Rs 50 lakh with tenures as short as a few months. .

India is one of the fastest growing fintech markets in the world. The county’s fintech adoption rate stood at 87% in March 2020, compared to a global average of 64%, according to a report by Research and Markets. Estimating the Indian fintech market at around 1,920.16 billion rupees in 2019, the report says it is expected to reach 6,207.41 billion rupees by 2025.

Benefits of online loan applications

Online loan applications provide funding with a click or a swipe. Its main advantages include:

Anytime, Anywhere: You can access these loans 24/7, from any internet-connected device and from any location.

Affordability: Online loans are quick and easy to access and provide business financing at competitive interest rates.

Flexibility: Businesses and individuals can access the amount they need and repay the loan at their convenience. Digital lenders also offer prepayment and partial payment options to borrowers, making digital loans convenient and flexible.

Access to unsecured loans: In most cases, there is no need to provide collateral to qualify for these loans.

Easy Eligibility Criteria: You can avail such loans without having to meet strict eligibility criteria.

Smaller Loan Amounts: Businesses can access loans as low as Rs 1 lakh to buy inventory, invest in equipment or pay suppliers or salaries.

Steps to apply for a loan online

Applying for a loan today can be very easy, just a few simple steps and you could have the amount disbursed within 72 hours.

Step 1: Choose the loan that’s right for you

Don’t be swayed by claims of the lowest interest rate or easy repayment terms. Compare interest rates and read the fine print. Knowing the terms of the loan can help you make an informed decision. You can easily find all the necessary information online.

Look for the various fees and other charges that the lender will charge. Almost every type of loan comes with fees such as processing fees, service taxes, late payment fees, etc. The processing fee is usually around 1-3% of the loan amount. Additional charges such as arrangement fees and processing fees may apply. These can significantly increase your cost of obtaining a loan.

Check if there are any fees for partial or full payment of the loan amount before the end of the term. If you can prepay the loan amount, you could save on interest payments, reducing your overall debt load.

Step 2: Use an EMI calculator to make an informed decision

An online EMI calculator is an extremely useful tool for understanding the monthly repayment amount, repayment term, and how much loan you can afford to repay. It can also help you determine if you qualify for a specific loan amount, based on your monthly salary or cash flow.

Step 3: Gather your documents

Apart from the loan application form, you will need to submit some essential documents to complete the KYC process. For personal loans, these documents include:

  • Proof of income, in the form of payslips, tax returns, Form 16, bank statements

  • Proof of Age (Passport, Birth Certificate, Aadhaar Card, Voter ID Card or PAN Card.)

  • Proof of address (Aadhaar card, electricity bill, passport, ration card or telephone bill.)

  • Photo ID proof (Aadhaar card, PAN card, voter card, passport or driver’s license.)

  • PAN card.

For business loans, some additional documents may be required, such as:

  • Proof of business continuity, such as store and establishment certificate/tax records -VAT/service tax/GST records.

  • Proof of ownership such as electricity bill/copy of agreement/maintenance bill, with share certificate/municipal tax bill.

  • CIBIL score – a minimum CIBIL score of 690+ is preferred for loan approval.

Step 4: Complete the application form

  • Visit the lender’s website

  • Go to the page of the type of loan you need

  • Click “Apply Now”

  • Fill out the form with the required personal information, such as full name, date of birth, contact details, etc.

  • Submit the application form.

Step 5: Instant Loan Approval

With advancements in fintech, you may have to wait 5-10 minutes for a response from the lender. Once the verification is done and you are notified of the approval, the loan amount will be disbursed within a maximum of 72 hours.


The Indian financial sector has evolved a lot in recent years. It is encouraging to see how easy access to financial services has become.

Advancements in technology have truly eliminated geographic barriers to financial services while providing features such as loan application tracking, reminders for EMI due dates, and much more.

The author is Director of Sales at Capital Float

DISCLAIMER: The opinions expressed are those of the author. Outlook Money does not necessarily subscribe to it. Outlook Money will not be liable for damages caused to any person/organization directly or indirectly.

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