Most of us who have had long standing relationship with a certain bank/s have received a call from the customer care offering a pre-approved personal loan. The competition between lending agencies has intensified so much that sometimes a long and reliable relationship is also not required or requested! Well, now the banks are ready to take the offer of personal loan a notch higher making it further easy and simple to avail it- by offering it through their ATMs. Before we tell you how the system is expected to work, let us first touch upon the very concept of personal loans.
What are Personal Loans
Personal loans are a category of loans that are meant for meeting personal expenses and emergencies. The best part about personal loans is that they can be put to use for plethora of purposes. Right from medical emergencies to your dream vacation, you can avail personal loan for just about anything. In some cases the bank may specifically debar certain uses of the loan money; same shall be mentioned in the loan document. With heavy competition to tap retail market such riders have become truly rare. Banks are now only interested in timely repayment of the loan amount. Personal loans are short term loans and need to be paid back within a year.
Advantages of Personal Loans
- Extremely easy to avail as there are almost no conditions attached except repayment and tenure
- Very quick processing time which makes these loans ideal for emergencies
- Personal loans can be used for any personal use without giving an explanation to the lender
- Minimum paper work and documentation
- Available at competitive rates
Disadvantages of Personal Loans
- They are available only for the duration of one year
- Compared to other loans, the interest rate on personal loan is higher
- Pre-closure and advance payments are usually not allowed or only allowed upon payment of penalty and charges.
- Easy availability leads to misuse of these loans in the hand of borrowers.
Now that we have discussed the Pros and Cons of personal loans, let us move on to the new initiative taken by banks to offer personal loans through ATM.
How will it Work?
Usually you visit ATM to withdraw money or check your balance. Now every time you avail the service of ATM, after the transaction is over the ATM screen will flash the offer of instant personal loan to you. If accepted, it will immediately disburse the loan to you. This is a rather easy thing for banks to do and all they need is, robust software to handle ATMs across India. Usually bank has all important information about its clients and account holders. It is on the basis of this information that the banks offer personal loans. Their metrics computes the loan amount based on income earned, average account balance maintained, average spending on credit card and credit history of the account holder. With the introduction of new system, this information will be patched to your account number and recognised every time you use your debit or credit card.
Reason behind the move
There are certain well founded reasons behind this initiative. The first one being capturing the retail market which is presently flooded with borrowers who are availing mainly vehicle or home loan. Personal loan is still a category that does not interest a lot of people. Many borrowers are not even well aware of this category of loan. Secondly, the demand for corporate finance has remained and continues to remain flat. The only growth that is being seen is in personal finance at retail level. This move will reduce the queue for loan at banks thereby relieving a lot of man hours that can be put to better use.
If a person who does not have any relationship with a particular bank yet wants to avail a personal loan then he or she can swipe any bank’s card in the ATM and request a call back by giving contact number.
Advantages and Disadvantages of the Move
At the very outset, personal loan through ATM has numerous advantages. It will over simplify the procedure and reduce congestion at the banks. Even persons who do not have any relationship with the bank will be able to approach and get in touch with their customer care without setting a foot in the bank. There is no time lag owing to loan processing, just press yes and receive the loan amount.
The main disadvantage is handling the cash amount in the ATM. A big amount getting dispensed catches eyeballs and can put the borrower at risk. The over simplification of the process may lead to incessant borrowing and misuse of funds. For those lacking financial discipline, instant personal loan could create a financial mess.
Withdrawal of personal loan from ATM is a big move by the banking sector and should fuel spending in retail sector. If withdrawing personal loan from ATM does not make you feel comfortable, visit us on letzbank where we get all categories of loan including personal loans, under one roof. Compare attractive offers from various well known names in the lending sector. If still in doubt, get in contact with our customer care for clarifications. We also have useful and innovative products other than loans like online Return filing platform in tie up with Clear Tax and Credit Score report powered by Experian. We also have an eligibility calculator which gives you an idea about the loan amount that you can apply for. Letzbank is your one stop shop for loans and returns. Visit us today and buy the dreams of tomorrow with our loans that take care of every occasion and need!