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Envision a system where borrowers can ask for a certain amount, however they don't need to use it all. Rather, borrowers can modify what they spend to their needs, and they just need to pay interest on the amount they spend, not on the whole <keyword id="173215" type="UNKNOWN" weightage="20" keywordseo="credit-line">credit line</keyword>. In addition, customers can likewise modify their repayment amounts as required, taking into account their budget or cash flow. For instance, borrowers can repay the whole outstanding balance without a moment's delay, or they can select to simply make the base monthly payments. 
 Well, it’s a reality now! Bangalore based <keyword id="138263" type="UNKNOWN" weightage="20" keywordseo="startup">startup</keyword> <keyword id="3697970" type="UNKNOWN" weightage="20" keywordseo="moneytap">MoneyTap</keyword> has launched a similar system in their app. Founded by <keyword id="815567" type="PERSON" weightage="20" keywordseo="Bala-Parthasarathy">Bala Parthasarathy</keyword>, <keyword id="193790" type="PERSON" weightage="20" keywordseo="Anuj-Kacker">Anuj Kacker</keyword> and <keyword id="605004" type="UNKNOWN" weightage="20" keywordseo="Kunal-Varma">Kunal Varma</keyword>, the app aims to empower the middle class consumer with loans starting from Rs 3,000 to Rs 5 lakh. 
 
“Growing up in India in the eighties and nineties, and coming from middle income group families, we have all faced shortage of additional funds at some point. At MoneyTap, we’re on a mission to change this and make credit accessible to those who deserve it,” said Bala. 
 
6 Steps &amp; you’re done 
 
1. Install app and provide your details to the integrated chatbot 
2. Get a pre-approval upto Rs 5 lakh 
3. Upload KYC Documents and receive money in just a couple of days 
4. Choose amount to be withdrawn and EMI tenure (2-36 months) 
5. Money will be transferred in your bank account instantly 
6. Repay EMIs on time to keep your credit line stagnant 
 
The app is available for all salaried employees across metro cities and plans to expand in other cities in the next few months. 
 
Banks &amp; Rate of Interest 
 The app was launched in partnership with <keyword id="2179992" type="UNKNOWN" weightage="20" keywordseo="RBL-Bank">RBL Bank</keyword>. When asked, Bala clearly stated that they’re planning to collaborate with other banks but for now it’s RBL. 
 
The rate of interests for loans vary from 1.25 - 1.5% per month and the application has a set-up fees of Rs.499-in addition to taxes to be paid to the bank. 
 
“We are delighted to partner with MoneyTap to launch India’s first app based Credit line. We have integrated MoneyTap’s technological innovation with our own banking system to provide a never-before 24/7 experience for users without compromising on security and compliance issues,” Harjeet Toor, Head - Cards, Retail &amp; MSME Loans and Financial Inclusion, RBL Bank, said in a statement. 
 
This will of course help RBL extend its user base by offering small loans and the credit market 
 
Market &amp; A ‘Revolving Cycle’ 
 With a <keyword id="152422" type="UNKNOWN" weightage="20" keywordseo="Line-of-credit">line of credit</keyword>, everything of the loan is accessible once it is allowed. This allows borrowers to access as much or as meagre as they need contingent upon their current needs. As the balance owed is paid down, borrowers can likewise withdraw the funds again, making the line of credit an ever revolving cycle. 
 
Credit markets have stretched insanely in response to the financial crisis, and a few analysts predict that things will deteriorate before they show signs of improvement. The kneejerk reaction by numerous credit card backers has been to get control over credit lines trying to fight off enormous losses or meet stringent regulatory requirements for having a certain amount of cash in reserve in proportion to how much credit they have extended. Sadly, this reaction may have an unintended impact of hindering profitability.

MoneyTap: India’s first “Line of Credit” App; Now pay
interest on what you use

<ul><li>Travel loans are <keyword id="35520" type="General" weightage="20" keywordseo="personal-loans" source="Orion">personal loans</keyword> and since they are unsecured, they have a high rate of interest. </li><li>Make sure your EMI is not more than 10% of your monthly income. </li><li>Carefully read and understand the terms and conditions of the loan, including repayment schedules and any potential penalties for late payments.</li></ul>A trip to Europe may be on the bucket list for many people, but it can burn a hole in your pocket. However, in this age when you can buy an iPhone 14 Pro Max in monthly instalments, you can also fund your Europe trip through a loan. “Personal loans for holidays are similar to regular personal loans, except that the borrower has flexible repayment options, wherein he can pay only the interest in the first six months and the regular EMIs can start post that. This helps the borrower manage his cash flow in a better way,” says Rahul Kalyani, vice president, partnerships, LoanTap, a personal loan app. <cmsannotation type="cmsannotation" annotationid="High interest rates" comment="subhead" text="High interest rates">High interest rates</cmsannotation> What comes in the guise of a holiday loan or a <keyword id="7185356" type="General" weightage="20" keywordseo="travel-loan" source="Orion">travel loan</keyword> is, thus, actually, a personal loan. And since these are unsecured loans, they have a high rate of interest. Interest rates on such loans would start from 10.5%, but can go as high as 24% per annum, according to BankBazaar. The <keyword id="6357149" type="General" weightage="50" keywordseo="hdfc-bank" source="Orion">HDFC Bank</keyword> website also mentions a similar interest rate range. Since the tenure for personal loans range from 12 months to 5 years, for a loan of ₹1 lakh at 14% interest, one will need to pay an EMI in the range of ₹8,979 (for 12 months) to ₹2,327 (5 years). Higher interest rates would mean a higher EMI outgo. The interest rates on these loans are determined by various factors. “First, credit score plays a significant role, as a higher score often leads to lower interest rates due to the lower risk associated with the borrower. Additionally, lenders consider the borrower's income level and debt-to-income ratio to assess their repayment capacity. Loan amount and term also affect interest rates, with larger amounts or longer terms potentially resulting in higher rates,” says Yashoraj Tyagi, chief business officer and chief technology officer at CASHe, a personal loan app. <cmsannotation type="cmsannotation" annotationid="The EMI can bite you for years to come" comment="subhead" text="The EMI can bite you for years to come">The EMI can bite you for years to come</cmsannotation> Taking a loan for a holiday means that you're going to remember your holiday for months if not years to come, and not for the reasons you would like to. Let us take an example. Suppose you take a loan of ₹6 lakh to fund a Europe trip for your family at an interest rate of 14%. If you want to repay the loan over 3 years, the monthly EMI will be around ₹20,500. This means that over the next three years, you will have an EMI commitment of ₹20,000 over and above your other monthly expenses. If not planned properly, this can hurt. Missed payments would mean penalties such as late fees, and an adverse effect on your credit score. <cmsannotation type="cmsannotation" annotationid="Analyse your EMI-paying capability" comment="subhead" text="Analyse your EMI-paying capability">Analyse your EMI-paying capability</cmsannotation> “Only take a travel loan if you don’t have enough cash in your assets,” says Anuj Kacker, chief operating officer and co-founder of Freo, a neobank. Before going for any personal loan like a holiday loan, it is important to take a close look at one's monthly expenses and financial obligations. “Understanding the debt-to-income ratio helps determine if the EMI payments can be comfortably accommodated within the existing budget. Performing a careful assessment of personal finances and creating a realistic budget that accounts for the EMIs can provide a clearer picture of whether the loan can be repaid without undue financial strain,” says Tyagi. You may also seek the advice of a financial planner or use online EMI calculators to evaluate whether you can pay off the loan smoothly and then make an informed decision. “Make sure your EMI is not more than 10% of your monthly income. Keep in mind that while the loan is available, be frugal where you can. Money which comes easily can be seen as free money and may be spent carelessly. Beware of that,” says Shweta Jain, chief executive officer and founder of Investography, a financial planning firm. <cmsannotation type="cmsannotation" annotationid="Keep in mind" comment="subhead" text="Keep in mind">Keep in mind</cmsannotation> It is important to take into account the complete cost of the loan, which includes the principal amount, interest rates and any additional fees. Conduct thorough research and compare offerings from various lenders to find the most favourable interest rates and loan terms that align with your requirements. “Carefully read and understand the terms and conditions of the loan, including repayment schedules and any potential penalties for late payments,” says Tyagi. Lastly, it is important to consider any possible changes in your financial situation and how they might impact your ability to repay the loan in the future. By being mindful of these factors, you can make a well-informed decision and enjoy your holiday without unnecessary financial strain in the years to come.

You can take a loan to fund your summer sojourn in Europe, but it pays to be careful

New Delhi, Jan 28 () Consumer lending platform MoneyTap on Tuesday said it has raised Rs 500 crore in a funding round led by global funds like Aquiline Technology Growth and RTP Global.
 The series-B funding round was a mix of equity and debt and saw participation from existing investors like Sequoia India, Prime Venture Partners and MegaDelta, MoneyTap said in a release.
 The funding will aid in creating a loan book of Rs 5,000 crore over the next 12-18 months, it said.
 Debt capital was secured from players like Vivriti Capital, Credit Saison and others in the form of co-lending and credit lines.
 The company had previously raised a total of USD 12.3 million.
 MoneyTap will use the funds to accelerate its growth trajectory, invest further in technology, data science, and launch its NBFC operations, it said.
 The company further said there are plans to significantly expand its geographical footprint from 60 to 200 Indian cities, bringing its unique credit line value proposition to the masses.
 "We will use this funding to scale our business, innovate with data-backed lending models and continue to hire aggressively. We will also use the funds to expand our credit offerings via our own NBFC," MoneyTap Co-founder Anuj Kacker said.
 MoneyTap was commercially launched in September 2016 by Bala Parthasarathy, Anuj Kacker and Kunal Varma. KPM DRR

MoneyTap raises Rs 500 cr in funding round led by Aquiline Technology, RTP Global

<ul><li>India has 1.9 crore personal loan consumers, said Manu Kumar Jain, the India head of Xiaomi. </li><li>According to a survey by Xiaomi, Indians take personal <keyword id="6362287" type="UNKNOWN" weightage="20" keywordseo="loans">loans</keyword> for five reasons – first comes medical emergencies. </li><li>Most surveys say that top reason for personal loans is medical emergencies. But bill payments are also popular for those who take short-term loans. </li><li>A Zestmoney report says that over 20% of loan amounts taken by women were for education. </li></ul>There has been a dramatic change in the Indian financial services sector. From a time when one would take a personal leave to go to the bank, we have arrived at a time when almost every service is available at the tap of a button. As fintechs evolve, availing personal loans is no longer a hassle either. This has also led to the birth of many lending startups in India, which give away small ticket personal loans. Startups like Early Salary, Slicepay even cater specifically to millennials. A large player in the smartphone market Xiaomi just launched <keyword id="6552363" type="UNKNOWN" weightage="20" keywordseo="Mi-Credit">Mi Credit</keyword>. It sees a potential in the 1.9 crore personal loan consumers in the country, said India head Manu Kumar Jain during the launch. According to a survey done by the smartphone maker, Indians take personal loans for five reasons – first comes medical emergencies, then shopping, followed by wedding, travel and education. While it may seem surprising that “shopping” comes second, much before education loans, the trick here is that most of it is small ticket loans. “Unlike personal loans that provide a one-time lump sum, a credit line gives the flexibility of borrowing as much as you need from your approved credit limit multiple times. So, people use MoneyTap not just for one-time large expenses but also for everyday credit needs,” said Anuj Kacker, COO and Co- founder, MoneyTap. At MoneyTap too, three main reasons why users take loans are – medical emergencies, bill payments, and family functions/weddings. However, another leading player in the segment Zestmoney has some interesting insights to share. Lizzie Chapman at the Xiaomi launch said that higher number women take big ticket loans for education purposes. Earlier in May, Zestmoney had conducted a survey which revealed that “over 20% of loan amounts taken by women were for education, whereas in comparison, the same percentage for men was 6%.” Moreover, the Zestmoney report also showed that the average loan amount for women is 35% higher than men. In 2019, the average amount of EMI financing taken by women stood at ₹20,000, whereas for men the amount was ₹15,000. See Also: <a href="https://www.businessinsider.in/business/news/xiaomi-launches-mi-credit-in-india/articleshow/72350148.cms">Xiaomi’s Mi Credit promises to give you a loan by the time you order and finish a cup of coffee</a>

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MoneyTap: India’s first “Line of Credit” App; Now pay interest on what you use

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You can take a loan to fund your summer sojourn in Europe, but it pays to be careful

Anagh Pal

MoneyTap raises Rs 500 cr in funding round led by Aquiline Technology, RTP Global

PTI

These are the top 5 reasons why Indians take personal loans

Sanchita Dash

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