Bridging The Lending Gap

When planning to buy a big ticket item like the latest gadget, you can always go for a credit card EMI. But what if you do not have a credit card? Are you still eligible to break down the price of the product into EMIs?

ZestMoney, a digital Fintech lending company is here to make this possible. It has a customer base ranging from non- credit card owners to new-to-credit customers and partners with online and in-store merchants to allow customers use credit limit and make purchases on EMI. The platform is completely paperless and instant credit limit is assigned based on credit worthiness of the applicant. To get a credit limit, users can create an account on their website (www.zestmoney.in) and furnish all the basic documents.

ZestMoney allows users to choose from different EMI plans and also offers 0% interest loans for select merchants. Without a credit card, a person can shop whatever he aspires for and spread the repayment across few months.  

“A customer can avail a ‘credit limit’ from ZestMoney at any point of time. Once they get a credit limit, they can buy their favourite products from any of their 1000+ merchant partners and enjoy the flexibility of paying in EMIs,” said Lizzie Chapman, CEO and Co-founder, ZestMoney.

Partnering with merchants and payment gateways

ZestMoney partners with merchants to enable their customers to spread their expenses over a period of time. Also, they recently partnered with leading payment gateways - Razorpay, Billdesk and Cashfree. So, merchants who are already using these payment gateways to serve their customers can now easily enable ZestMoney as a payment method and start offering the convenience of EMIs to their customers.

How interest rates are determined

ZestMoney is a  tech-enabled decision making platform.  It uses machine learning and artificial intelligence to assess the credit-worthiness of a loan applicant. Their proprietary decision and risk engine, which has been trained over three years of using a lot of alternative data evaluates multiple factors like : loan term, value, income and user's history. The product which the user wishes to buy and merchant from which the purchase will be made are some factors considered while determining interest rates. Good repayment behaviour is awarded by better interest rates and higher credit limit on subsequent loans.

“We follow risk based pricing model, which essential means that the interest rate applicable to a customer varies from 0 to 2% per month according to their risk profile. Currently, our users can avail 0% interest on 3 and 6 month EMI plan when they shop on Amazon, Flipkart, Jabong, Myntra and MakeMyTrip,” said Chapman.

Keep in mind

Users should remember that at 2% per month, the interest rate is at 24 per annum which is on the higher side, even higher than a personal loan. Getting a loan on ZestMoney could be easier since you are buying a specific product with a merchant, but higher interest rates can hurt you. One should also look at 0% interest schemes carefully as there could be hidden. While availability of EMIs make purchases easier, one should ensure that one can pay off the EMIs without hurting one’s cash flow.