Here’s everything you need to know about bag loans
What is a bag loan? Who offers and how can you choose it? CNBC-TV18.com spoke to experts to clear up your doubts about bagged loans
We are witnessing version 2.0 of the personal loan in the form of a bag loan, which is shaking up the entire market with tailor-made financial loan offers.
Sachet loans are a form of nano-credit or small loans that are granted for a short duration and are mostly approved immediately, followed by an instant disbursement of the loan amount.
This line of credit is generally available in ranges of Rs 10,000 and Rs 1 lakh, and can offer tenures between 7 days and 12 months, said Vikas Garg, Founder and CEO of Paytail.
“The lending process is fast and becoming faster as fintech comes into the picture with technology solutions that eliminate the endless paperwork process. Sachet loans offer a systematic approach to dealing with the shortage of funds,” said Garg CNBC-TV18.com.
How can you choose it?
It can be used by downloading a loan application online or on a mobile phone, completing a simple online application process and providing minimal documentation for verification and approval, said Anil Pinapala, CEO and Founder of Vivifi India Finance , while talking to CNBC-TV18.com.
How is it offered?
When should you take advantage of it?
Sachet loans can be used when there is an immediate need for funds for unexpected expenses such as medical emergencies, immediate payments, etc., Pinapala said. CNBC-TV18.com.
“When you run out of money in the middle of the month, small bag loans can be used to manage expenses until the next paycheck without contacting family, friends, employers or unregistered lenders,” he said. he declares.
In other words, various unforeseen expenses can be incurred by people who may struggle to meet their financial limitations. Sachet loans come to the rescue for these unique moments.
According to Pramod Kathuria, Founder and CEO of Easiloan, these products are free from the burden of heavy EMIs, and even MSMEs can choose them to meet their short-term working capital needs.
What is the flip side?
“Some app-based lenders charge daily interest, and the annual percentage rate (APR) can be as high as 400% per annum,” BankBazaar.com’s Adhil Shetty told CNBC-TV18.com.
Moreover, there are many illegal lending apps available on smartphone app stores, and customers should be judicious when choosing one.
In addition, Finance Minister Nirmala Sitharaman expressed concern over the growing number of illegal loan apps offering loans/microloans – especially to vulnerable and low-income people – at exorbitant interest rates and fees. treatment/hidden, and predatory recovery practices involving blackmail, criminality intimidation, etc.
So what should borrowers do?
It is always best to watch out for red flags and opt for RBI associated lenders.
In addition, it is prudent to analyze the situation of the loan that customers are borrowing to find the best source of financing.
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