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Your new gadget is just an EMI away

What's stopping you from buying that smartphone that had set its eyes on years? If you are a student or young professional, chances are you simply don't have enough to spare for the purchase. While the former has no regular income channels, the latter may have a hard time saving enough after paying the bills. A convenient solution is to pay in EMI. However, this is easier said than done, as bank loans come with their own set of conditions, and EMI schemes in the store require credit cards and offer only limited inventory options.

Finomena, a startup with a unique loan verification and approval system, offers an alternative. It is a customer experience-driven financial technology platform that enables inclusion by offering easy access to credit for people who have never taken a loan before and therefore do not have a credit score. Additionally, it allows you to register online and simply browse e-commerce sites. and choose the gadget you want. After that, you can choose between EMI and financing options and apply with a single click.


Banking but not eligible

The phrase & # 39; financial inclusion & # 39; evokes the idea of ​​a section of people without access to basic banking services. This is why one of the main government initiatives to facilitate financial inclusion has been to open bank accounts through Jan Dhan Yojana. However, a bank account alone does not guarantee access to credit. A section that is largely excluded in terms of access to loans and credit cards, despite having bank accounts, includes students, young professionals and freelancers. More than 75% of Indians do not have a traditional score at the credit bureau.

"We can't rely too heavily on traditional models to measure a potential customer's credit score, as there is no traditional data for these people. They may not have traditional proof of income, but with the power of a smartphone, they are leaving a lot of fingerprint digital data, "says Abhishek Garg, co-founder, Finomena. The platform uses this big data to create machine learning-based credit and risk rating systems that take into account more than 20,000 data points to assess a borrower's creditworthiness.

Shashank Singh, 26, can be a lawyer at the Delhi High Court, but getting a loan from a bank was almost impossible. "As an advocate, my income fluctuates from month to month, so banks are reluctant to issue me credit cards or approve my loan applications," he says. When he wanted to buy an iPhone 6S, Singh approached various banks to obtain a loan, but was rejected each time. He began looking for alternatives and ran into Finomena. "They had a personal conversation about their processes and sent someone to pick up the documents from my house. My loan was approved in one day," says Singh.

What is in a credit score?

A credit score is a three-digit numerical summary of your entire credit history. It is prepared based on the information provided in your Credit Report. The credit score typically ranges from 300 to 900. Most banks and financial institutions rely on this figure to determine the creditworthiness of potential rowers. In fact, 79% of approved loans are for people with a score above 750.

However, this is a setback for the unbanked youth population as they may not have a credit score, resulting in a vicious circle. Finomena founders Riddhi Mittal and Abhishek Garg conducted extensive research on loan disbursement mechanisms and borrower demographics, revealing that most banks and NBFCs shy away from students and young professionals because Traditional KYC data collection modes don't work for them. "Most of our clients are on their first jobs or self-employed without traditional testing," says Mittal.

Spee
d, convenience and flexibility

While there are a few options available for customers to purchase high-end EMI-based devices, they often have hidden clauses. In-store EMI programs require the customer to have a credit card. However, less than 2% of Indians are credit card holders. These schemes have also established holdings and EMI amounts payable by the customer. Finomena has gone a step further by introducing IMF or flexible monthly installments.

Viren Makwana, an IT student who also has a part-time job, was pleasantly surprised to learn that she could choose the amount of the down payment, as well as how much she wanted to pay each month to buy a laptop.

The 21-year-old settled for a monthly payment of 2,000 rupees to pay off the loan over a 12-month period.

"Initially I did not believe that online EMIs were possible, but once I spoke to a representative from Finomena, they reassured me that the process would work," he says.

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