Survive the festive season with easy loans from peer to peer lending platforms
New Delhi: With the onset of the festival season, we not only have to open our hearts but also need to loosen our purse strings. With almost every festival being celebrated, most consumers are gearing up to spend big money over the next weeks on things like home renovation, gifts for family and friends, electronics, cars and so on.
Retail demand continues to exhibit strong growth throughout the year and is expected to further spike during the festive season. But volatile market conditions and rising banking rates have given rise to doubts in the minds of non- bank lenders who are already facing tight finance circumstances.
Does that mean that consumers looking to fund their festive season shopping will find it difficult to do so?
While banks and NBFCs are unequipped to offer loans in a very short time, peer to peer lending on the other hand, is fast emerging as one of the major alternative options for borrowing festive loans.
There has been an uptrend in the number of festive loan enquiries in peer to peer lending platform over the last three years. The sector has been witnessing a surge in demand for loans from September to December every year.
While banks look for good credit history for disbursing festive loans, a borrower can raise urgent loan during the festive season even if he/ she does not have any collateral. The use of CIBIL data has been the backbone of instant loans in case of peer to peer lending. The technology driven lending model in peer to peer industry enables a faster loan processing. Risk assessment algorithms evaluate the credit profiles of lenders and borrowers in a quick time frame and give almost instant approvals. Thus, a loan which takes six to seven days to reach beneficiary accounts in case of other financial platforms usually just take two to three days in case of peer to peer lending. The process is more seamless, efficient and convenient for customers.
Another reason for the rise in demand for festival loans in the P2P segment is that there are no penalties for repayment, no hidden charges and the loan can be availed for festive purchase starting from family gift items to expensive consumer durables like electronics, cars and any and every kind of festive related purchase. To add on to these, the repayment terms are also flexible and one can repay the loan at any point of time which is convenient to the borrower.
It is however important to keep in mind that consumers do not go overboard with borrowing due to easy access of loans. Since access to loans has become easy, there is risk of excessive borrowing. Borrowers rather should first plan for repayment of loan even before taking the loan so that the finances do not get stretched.
It is thus advisable to make a budget and also to have some liquid funds in case the spending exceeds the estimated budget.
(Mr. Raghavendra Pratap Singh, Co-Founder of i2ifunding. The views expressed are strictly personal)