Loan in confinement: how to take out a loan without leaving your home

In a world affected by the coronavirus, you can no longer afford to risk having face-to-face meetings with strangers. Here are two easy ways to get credit without leaving your home.

Traditionally, loan account openings have been an offline process. You meet with the bank, hand in your photocopied documents such as proof of identity and address, pay the processing fee by check, sign your loan application and wait for it to be processed. You must go through the KYC process, which is a legal requirement for new account openings. Once your request is processed and your identity established, you receive your funds.

In a world affected by coronaviruses, the problem here is the offline meeting with the bank. You can no longer afford to risk having face-to-face encounters with strangers. With containment in your area, it is also not possible to do this. At the same time, it has become critical for businesses and the self-employed to apply for credit in order to revive their professional activities which have been hampered by the pandemic.

Here are two easy ways to get credit without leaving your home.

Go to lenders offering contactless loans

We have entered the era of contactless finance and lending. Contactless financing means not having to physically meet with your bank representative. This is in line with all other forms of contactless commerce that are happening right now due to the coronavirus crisis. For example, home deliveries by online grocers are also contactless to eliminate the risk of infection. Look for banks that are currently offering loans through digital methods from KYC.

Digital KYC includes the use of Aadhaar OTP based e-KYC as well as the recently launched Video KYC process used by some banks. These digital methods from KYC allow banks to authenticate customers remotely, without the need for physical appointments or even handing over photocopied documents. the RBI approved a Video KYC process in January. In light of the current crisis, banks have started to use the process to acquire new customers digitally to overcome various challenges on the ground such as foreclosure.

Check the pre-approved offers

One of the easiest ways to get credit is to take advantage of your existing relationships with banks and financial institutions. You may already have pre-approved offers from banks where you have savings accounts. Offers may also be for personal loans and credit cards. In order to facilitate the loan disbursement process, banks and financial institutions create pre-approved offers for you based on your relationship with them. If you have a stable income, a clean credit history, and an established relationship with your bank, you can get your loan easily. You can connect directly with your bank for this, or go online to the loan aggregator websites where all your pre-approved offers from various financial institutions will be listed in one place.

Lastly, it can be a hard pill to swallow, but if you run out of options, you may need to seek help from your friends and family. You can ask them to give you a loan on easy repayment terms. You can offer a guarantee if it helps your case. Remember to repay the entire loan without delay, as it will not be an easy time for them too.

(The author is CEO, BankBazaar.com)

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Elizabeth J. Harris