Online Loan Vs Bank Loan - Which is Better?
Published on : January 16, 2020

There are two approaches to getting a loan. One is the traditional approach wherein you walk into a bank or financial institute, talk to their representative, decide on the product that you want to use, and apply for the particular loan. The other approach, which is being increasingly used in today’s time, is more tech-savvy and super convenient. This approach is that of availing a loan online. Here, your research loan products on your laptop or phone, find out about authentic and trustworthy firms that offer such products, compare the loan terms among different vendors, and then make an informed decision about which lender and loan to target.

Understanding How the Offline Personal Loans Work

Once you have identified the need for a personal loan, you will then need to approach a bank or a financial institution. Typically, you are then introduced to a representative who explains to you, in detail, about the process and features of the personal loan. You can use this opportunity to clarify your doubts and ask any additional questions you may have. You are asked to fill out certain forms and submit copies of the required documents for Know Your Customer (KYC) purpose. The lender will then accept your application after checking that you have submitted all the required documents; in case there are any missing documents, you will need to procure and submit hard copies (in most cases).

Once you have submitted all the necessary papers and furnished the information they require, they will scrutinize your application. Once your application is approved, your personal loan will be disbursed and appear in your bank account in a certain number of days. This whole procedure takes some time, based on the lender’s scrutiny, documentation needed, and loan processing time.

Understanding how the online loans work

Digitalization has become the norm in developing countries like India, and this revolution has also made inroads in the consumer lending industry as well. You can browse all available personal loan products at the click of a button, from the comfort of your home or office. You can compare the loan features of various lenders and pick out the one that is best suited for your needs. You then need to upload all the documents required for your loan application. Since you are required to submit soft copies of the documents, you will need less time for submission (as opposed to hard copies that would need you to take print outs and submit these in person or via courier). Once the documents are verified and authenticated, the loan amount is disbursed to your account. Some lenders disburse the loan amount within 24-36 hours based on your eligibility.

How are offline and online loans different?

Easy accessibility

You can access online personal loans from anywhere as long as you have a laptop or smartphone and an internet connection. These products are basically available at your fingertips; you can check out the loan products and their features easily and at any time on your smartphones and refer to them at leisure, taking your time to go through the details as per your convenience. You just need to download the application and you are good to go.

On the other hand, for offline personal loans, you need to visit a branch of the financial institute in person. You may need to fix an appointment with the representative and plan your visit on the day and at the time when the branch is open, that is, during working days at specific office hours.

Know more – Personal loans – Top 5 Questions Answered 

Know Your Customer (KYC) documentation

KYC is a mandatory part of any financial transaction. For online personal loans, the KYC documents needs to be uploaded on the lender’s portal. They will check the authenticity of the documents and approve your personal loan instantly.

For offline personal loans, you need to submit physical copies of each document. The lender will scrutinize each document and check its authenticity. Since there is heavy paperwork involved, the process may take some time.

Processing Time

Once the documents are uploaded, the eligibility is established, and the loan is approved & disbursed within immediately. Today, lenders use advanced technologies to speed up the process and make it more customer friendly.

By contrast, the process of physical verification in offline loans is tedious and time consuming. There is a lot of paperwork involved. Therefore, the processing time is much higher than that for online loans.

Know More – Personal Loan in 24 Hours – How Is it Possible?

Comparison of the features of different products

While browsing for personal loans online, you have the option of exploring features of loans from various lenders. You can compare the interest rates and terms of payments before deciding which lender you want to borrow from. This gives you the advantage of choosing from the best product available in the market.

For offline personal loans, the task of comparison is tedious and time consuming as you must approach each lender personally and find out about their product features. Once the information is gathered, it needs to be analyzed and processed manually. This process could be physically draining.

Charges Involved

For online loans, the charges and terms of the loan are mentioned specifically on the lender’s website. There is no hidden cost involved in loan processing.

In case of offline loans, you may have to pay commission to an agent. If the lender requires any kind of attestation or authentication on stamp paper, you need to get this done at your end and bear the cost.

Advantages of an online personal loan

Based on the comparison provided above, let’s check out the advantages of an online personal loan.

  • It is convenient – As discussed earlier, online loans provide the convenience of applying from anywhere. Through use of mobile application, it is just a click away. You have the liberty of uploading the documents online without having to worry about physical submission. The scrutinization process is also expedited using advanced tools like Artificial Intelligence (AI) to check your eligibility.
  • Advantage of pre-approval – Some banks or financial institute provide pre-approved personal loans. This means that based on your income and credit history, the lender determines a certain amount that you can avail by providing minimum documentation. Since the eligibility is already established, the processing time is saved and loan is disbursed immediately.
  • Comparison between various products – The main advantage of online personal loans is that you get to compare products from various lenders, easily. Based on your needs, you get to pick the best product suited for you.
  • Quick application and processing – Since there are no paperwork involved and the process is transparent, the processing of the loan happens very quickly. These can therefore be termed as instant personal loans.
  • Availability of Innovative products – To attract customers, online vendors are providing innovative products like wedding loans, travel loans, and super bike loans that are tailored to meet specific financial needs. These are types of personal loans and come in handy in times of need. With so many products available in the market, it has become easier for applicants to make an informed choice.


With the Digital India initiative, internet penetration is growing exponentially, and broadband facilities are reaching even the most remote locations of our country. Various programs have been launched by the government in order to spread awareness about digitalization. Working professionals and millennials are finding it easy to fund their dreams using online personal loans.

Features like easy accessibility and instant approval are popularizing these loan products among the youth. The market for such personal loans is growing, and lenders are sweetening the pot by providing innovative products and facilities that are customized as per the dynamic needs of the young professionals who seek such personal loans. Looking at the popularity of smartphones, all lenders have launched their mobile applications in order to expand their presence and reach across all market segments.

With online personal loans, it has become easier to obtain funds when you bank account has dried up and pay day is still far away! With so many players competing to capture the market and please the consumer, it is a great time for the consumer to put his/her needs first, compare the available products, and avail a personal loan online that best suits his/her needs.

LoanTap provides online personal loans ranging from ₹50,000 – ₹10,00,000 at extremely competitive interest rates. Download our Online Loan App: Google Playstore / Apple App Store