With the rising quantity of fintech organizations in the lending area, access to credit score has emerged as convenient for all people, including students. A new product from SlicePay, a Bengaluru-based totally startup, makes a specialty of collateral-unfastened lending to college students and a few other classes.
Jitendra Soni, 22, an engineering pupil from Bengaluru has been using the SlicePay card on account that May this yr. “My university charge is quite excessive so my parents (based totally in Kolkata) weren’t capable of shipping me cash for different prices each time I requested them. I might have to borrow cash from buddies which I didn’t like,” stated Soni. Earlier, he could purchase items and offerings thru the app, which is linked to over five million traders, which includes Flipkart, Bookmyshow and Paytm. He can now use the Slicepay card at service provider institutions as well. “My gift credit score restrict is ₹40,000 and I’ve usually repaid the bill on time as my mother and father ship the cash in some unspecified time in the future every month,” said Soni.
While Soni is sensible sufficient to pay up his payments on time, smooth get admission to to credit at an early age may be dangerous. So think before going for this card. We provide you with the info.
The Slicepay card
A student has to post his college ID, address proof and an identification proof for the KYC technique. The fintech then applies various other filters along with statistics from the consumer’s mobile and social networking systems to determine whether the scholar is eligible for the card or not. “Banks use about 20-30 parameters, which include account statements and CIBIL rating. We don’t study such parameters because someone has to lend to customers who don’t have a salary slip or a CIBIL score,” stated Rajan Bajaj, founder and leader government officer, SlicePay. Once the KYC manner is finished, the scholar gets the cardboard and could need to finish the only-time card activation method through the SlicePay app.
The enterprise offers a credit score restriction of as much as ₹60,000 to university college students, however, the limit varies from person to man or woman. If you’ve just on-boarded the platform, your credit score limit can be lower and might growth based totally on how punctual you’re together with your payments. The SlicePay card additionally offers no-price EMIs—much like those provided through famous structures like Amazon and Flipkart—of up to six months while you purchase products from choosing merchants thru the app.
Unlike different credit score playing cards, the SlicePay card does not have a “minimal amount due” option. If you don’t repay within the billing cycle, you’re given a window up to five days to pay up. On the fifth day, your invoice will robotically get converted into an EMI. You can pick out any repayment duration of as much as 365 days.
“For longer tenure EMIs, the hobby will vary based on the client profile. Typically, for one year, the hobby charged on the EMI may be in the range of 12-15%. For six months, it might be about 6-eight% of transaction quantity. In a 12-month EMI plan for a ₹10,000 invoice, APR (annual fee charged for borrowing) may want to go as much as ₹1,500 more on the whole quantity,” said Bajaj. In assessment, the hobby charge charged by using credit score cards for a duration of three hundred and sixty-five days is 24-forty two%, in keeping with facts from online market Paisabazaar.Com’s website.
If you don’t pay your EMIs on time, reminders could be despatched to you. You’re given a 3-day window to pay your EMI; a penalty kicks in from the fourth day of non-charge if the invoice amount is more than ₹250. You are required to pay ₹20 in step with day plus the interest and this can go as much as a maximum of ₹2,000. Further, an agency representative can also approach you in man or woman to discover a way out.
Also, there’s no prepayment penalty in case you want to shut the mortgage earlier. “Credit card EMI schemes may additionally have a prepayment penalty clause wherein you get charged an amount for prepaying to your outstanding foremost quantity. But as a financial institution’s unswerving purchaser and credit score cardholder, you could negotiate together with your financial institution for a waiver of this penalty,” stated Navin Chandani, chief commercial enterprise officer, Bankbazaar.
Does it paintings?
The app has a virtual card which eases the payment method. Parijat Garg, senior vice-president, CRIF High Mark, a credit data corporation, said credit allows one to fill any brief financing gaps.
This is a fantastic step in the direction of bringing people into the credit score fold while traditional lenders might not be inclined to, said Hrushikesh Mehta, u. S. Supervisor, ClearScore, a credit score statistics organization.
While that is genuine, is it ok to show college students to credit score to fulfill their way of life fees? “Learning to use credit from an early age makes you aware of the possibilities of availing it at a later degree for more vital decisions together with enterprise or housing,” said Garg.
However, at a younger age, it’s also clean to get tempted to borrow extra than you could have enough money. Moreover, there may be no parent supervision worried. “Since it’s so easy (to get credit), the pupil may not understand the impact of lacking bills,” stated Garg.
Shweta Jain, CEO, and founder, Investography Pvt. Ltd said this is a product students should do without. She started exposing college students to credit score for the duration of their childhood ought to lead to an era this is hooked on it. “It is dangerous to give students such energy without giving them the necessary training,” said Jain.