Online loans are quickly gaining popularity in Sri Lanka as more people discover the convenience and benefits they offer over traditional bank loans. Here are some of the top reasons why Sri Lankans are turning to urgent cash loans for their financing needs:
Fast and Easy Application Process
One of the biggest advantages of online loans is the fast and easy application process. Borrowers can apply entirely online by submitting some basic personal and financial details on the lender’s website or mobile app. There is no need to visit a bank branch and submit piles of paperwork. The whole process can be completed in less than 15 minutes.
Online lenders utilize sophisticated algorithms to assess a borrower’s creditworthiness. This allows them to make lending decisions and disburse funds much faster than traditional banks. Applicants can often get approved and receive funds within 24 hours of applying. This speed and convenience make online loans ideal for meeting urgent financial needs.
Flexible Loan Amounts
Most online lending platforms in Sri Lanka allow borrowers to customize their loan amount based on their specific requirements. Loan amounts can range from LKR 10,000 to LKR 250,000. Borrowers only take as much as they need.
This is different from banks, which usually have fixed loan amounts that may not match a borrower’s needs. The flexibility of online loan amounts makes them suitable for both small and large financing needs.
Lower Interest Rates
Online lenders often offer more competitive interest rates compared to traditional banks. This is because they have lower overhead costs since all operations are digital. The savings are passed down to the borrowers in the form of lower interest rates.
Rates from leading online lending platforms like Cashx start at just 0% per annum. This makes online loans much more affordable than credit cards and some personal loans from banks that charge upwards of 24% interest. Lower rates help reduce the overall cost of borrowing for Sri Lankans.
Shorter Repayment Terms
Another benefit of online loans is their shorter repayment tenures. Most lenders allow borrowers to select repayment terms ranging from 3 months to 12 months. The loans can be repaid quickly within a year.
Shorter terms mean lower total interest outgo for borrowers. It also means the loan will not stay on the borrower’s credit history for too long. Responsible borrowers who take online loans for immediate needs and repay on time can quickly become eligible for even better deals from lenders.
No Collateral or Guarantor Needed
Online lenders do not ask for collateral or guarantors for extended unsecured loans. This makes qualification easy for applicants who do not own assets to pledge and those who cannot find guarantors. They can still get the funds they need.
Unsecured online loans are issued based on the borrower’s creditworthiness and income documents. As long as applicants meet the lender’s eligibility criteria, they can get approved without security. This simplifies access to credit.
Disbursement Direct to Bank Account
Another notable benefit is that online lenders directly credit the loan amount to the borrower’s bank account. There is no need to pick up and deposit physical cheques. Funds transfer directly to the applicant’s account and can be accessed immediately.
Direct bank transfers allow instant access to funds in times of urgency. It also prevents potential fraud through physical cheque thefts and loss of cheques. The entire process from application to disbursal can be completed digitally for the safety and convenience of borrowers.
Prepayment Flexibility
Most online lenders allow borrowers to prepay the loan anytime without penal charges. This helps disciplined borrowers save on interest costs by paying off their dues ahead of schedule. Any extra funds can be used to close the loan early or make additional payments to reduce the interest burden.
Banks generally have very strict prepayment policies that prevent early settlements or charge hefty fees. The flexibility offered by online lending platforms puts greater control in the hands of the borrowers.
Credit Score Improvement
Responsible borrowing and timely repayment of online loans can help improve credit scores. This is because online lenders report borrowers’ payment behavior to credit bureaus like CRIB. So borrowers who maintain good repayment records see enhanced credit profiles.
Higher credit scores make it easier to qualify for loans in the future at lower interest rates. They also improve the chances of getting approved for credit cards, mortgages, etc. Disciplined borrowers can leverage online loans to build their credit histories.
Ease of Comparison
The online lending space allows easy comparison of interest rates and features across different platforms. Borrowers can access quotes from multiple lenders with a few clicks and choose the lender offering the best terms.
Comparison shopping for the lowest interest rate was not possible with traditional banks as it required separate physical visits. Online tools now empower borrowers and promote competition among lenders.
The rapid growth of online lending in Sri Lanka is driven by these compelling benefits. Speed, convenience, flexibility, and transparency make these loans an attractive option for different borrowing needs. With more players entering the market and stricter regulation, online loans are sure to gain even greater acceptance among Sri Lankans in the coming years.
FAQs
What are the benefits of online loans?
Some key benefits of online loans are fast approvals, flexible loan amounts, lower interest rates, shorter repayment tenors, no need for collateral/guarantor, direct disbursal to a bank account, prepayment flexibility, and ease of comparison.
How quickly can I get an online loan?
Good online lenders like Cashx can approve and disburse funds within 24 hours of completing the application.
What is the typical interest rate on online loans?
Online loans have interest rates starting from 0% per annum. Rates are generally lower than traditional bank loans.
How much can I borrow?
Loan amounts range from LKR 10,000 to LKR 250,000 based on the borrower’s eligibility.
How long do I have to repay the loan?
Repayment tenors range from 3 days to 12 months. Shorter terms reduce overall interest costs.
Are there any hidden charges?
Reputable online lenders provide full transparency on all charges applicable. There are generally no hidden costs.
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