Why online loan applications in India may sometimes be a waste of time?

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Why online loan applications in India may sometimes be a waste of time?
You do a random google search on applying for loans online and you invariably come up with several portals that offer you quick loan approvals, especially personal loans.

One such portal that we did a random google search says "instant approval in two minutes at interest rate of 12.99 per cent." Is it that easy though? Maybe not.

Once you are done with the online application, you get a call later from an executive, who says she will send somebody to collect the forms. Once your forms are scrutinized, your problems begin. Your online loan application, which was once approved has now been rejected.

What seemed as a very east task at the beginning by answering just a few questions is now likely to be more tedious than thought.

And, what investors miss out is a statement that "this is not a sanction letter" at the bottom of the page, when filing the online application. In any case, the application maybe rejected and this could be for various reasons. Some of which include the following:

a) Bad credit rating or Cibil score

Your Cibil sore maybe bad, because of an earlier default or delayed payment. In this case the bank is likely to reject your application. Read more on how to get your Cibil score here

b) Documents may not be in order

The online application will not scrutinize your documents. On verification it maybe found that your KYC documents are not in order or other documents are improper.

c) Lower amounts

The bank may decide that based on your credit score and the bank's own guidelines the total amount sanctioned online should be lowered.

d) Interest rates may vary

In case of personal loans it would depend on the bank and the company that you work for. Accordingly, the interest rates may vary than what is offered online.

e) In case of home loans a lot of verification

If your home loan is approved online do not be overjoyed. For home loans the process of getting a sanction is very tedious. Sometimes, the property may not be approved by the lender. At other times, the property maybe out of jurisdiction, while at other times there may be a "red flag" for other reasons. Home loans are loans that are bound to take time for approval and should not be taken for granted.

Always remember that when you feed your details for an online loan, it's just the basic details. Of course, it will at times give you a fair indication that you are headed in the right direction. But, by no means it should be construed that the process is over and the amount would be remitted to you. It's far more complex than that, especially home loans.


Online application always comes with scrutiny. It is a must that your KYC documents, credit score and salary certificate would undergo a check. So, more than being elated one must keep the documents in order and prepare for some disappointments.


Read more about: loans, online, cibil
Story first published: Tuesday, September 2, 2014, 8:22 [IST]
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