Digital financial literacy for socioeconomic inclusion and equity

e-Learning Hub | Digital financial literacy: be smart with your money in digital age

Awareness raising and motivation workshop >> Interactive readings >> Digital services for personal credits and loans

Understanding Digital Loans and Credits


Digital loans and credits involve the process of borrowing money electronically, typically through online platforms or mobile applications. Unlike traditional banking methods, which may entail lengthy paperwork and waiting periods, digital lending enables borrowers to receive funds with greater speed and efficiency.

Topic 1 What’s the difference between loans and credits?

  • Close up of businesswoman with credit card checking her bank account on digital tablet. A loan is a broader concept and covers a variety of financing arrangements where a sum of money is transferred from one person or institution to another. Credit is a specific type of loan which is usually granted for a shorter period of time and at higher interest rates. Loans can be used for a variety of purposes, such as home purchase, business development or consumer use. Credits are mostly used to meet short-term financial needs.
  • The repayment term of a loan may be longer than that of a credit. The repayment term of a mortgage loan can be as long as several decades, while consumer credit typically has a repayment term of a few months to several years.
  • Interest rates on loans are generally lower than on credit. This is because the repayment term is longer and the risk is lower.
  • The risk of a loan is lower than that of a credit because the repayment period is longer and the borrower has more time to accumulate sufficient funds to repay.
  • Loans can be granted not only by banks but also by other financial institutions such as credit unions or pawnshops.
  • Loans are often subject to conditions, such as the requirement of collateral. Like loans, some types of credit may require collateral.

Topic 2 What is digital lending?

Digital lending is the process of providing credit through online platforms, bypassing traditional intermediaries like banks. With digital lending platforms, you can now get loans quickly without long credit checks or a lot of paperwork. Applying for a digital loan begins with completing an online application form. This form collects essential personal and financial details from the borrower, which the lender will verify.

Topic 3 The risks of digital borrowing and digital lending

Mature blonde woman with digital tablet and credit cardDigital borrowing has revolutionised access to credit. However, this convenience comes with significant risks. One major concern is cyber attacks which is a deliberate attack to steal, alter, or destroy data, or to disrupt services. Furthermore, many individuals engage in irresponsible digital borrowing, obtaining loans without adequately assessing their ability to repay. The ease of obtaining fast digital loans can tempt individuals to borrow more than they can afford. This behaviour can quickly lead to a poor credit score, which indicates a negative assessment of one’s finances. Before extending a loan offer, lenders will evaluate an applicant’s creditworthiness to prevent irresponsible lending and safeguard the financial well-being of their clients.

Topic 4 Some ways to improve your digital literacy:

  • Improve your computer literacy skills: learn how to use a computer and a web browser to easily perform a variety of tasks related to loans and credits.
  • Learn how to use your bank’s or credit institution’s e-banking system safely and conveniently.
  • Learn how to keep your personal data safe online and protect it from fraudsters.
  • Attend training courses, seminars, watch video tutorials and read media articles related to digital borrowing.

Topic 5 Tips before getting a consumer loan

  • Assess whether you will be able to repay a consumer loan.
Try to set aside a few months for the consumer loan payment. You may be able to save money and not have to take out a loan. Remember that an item or service purchased with a consumer loan will soon become a thing of the past and you will have to make payments for months or even years to come.
  • Apply for a consumer loan with several consumer creditors.
A closeup shot of a person thinking of buying or selling a houseRemember that a consumer loan can be provided by commercial banks, credit unions, other consumer creditors (also known as fast lenders or leasing companies) or peer-to-peer lending platforms.
  • Read the contract carefully before signing it.
Read this document carefully and compare the terms offered. Pay attention to the actual cost of the consumer loan. This consists of the loan repayment, interest, contract and administration fees. Choose the provider offering the best loan terms.
  • Think carefully about the term of the consumer loan – the period of time over which you will have to repay the consumer loan.
There is no legal limit on the length of time, but remember that the longer the repayment period, the more you will pay in interest and other charges.

Topic 6 The advantages and disadvantages of digital lending platforms

Advantages of digital borrowing:
  • Digital borrowing is much faster and more comfortable. Before issuing a loan, banks usually request a pile of documents to prove your financial capacity. Whereas, getting a loan online requires only registering on the online system, confirming one’s identity and choosing the amount and term of preference.
  • Service flexibility. Banks have their standards and rules that every customer must follow. It is almost impossible to negotiate changes to these rules. By contrast, fast credit companies have the flexibility of a range of services such as extension, postponement and refinancing.
  • Promotions and discounts. Many online credit providers offer promotions and discounts to attract customers.
Disadvantages of digital borrowing:
  • Reduced human-to-human interaction in digital borrowing can lead to less personalization, making it harder to meet individual borrower needs. It can also hinder effective problem-solving and emotional support, which are essential in making financial decisions.
  • Significant dependence on technology and the Internet. A customer’s access to the internet is essential for their effective use of digital lending platforms. Without reliable internet access, customers may face significant challenges in applying for loans, submitting necessary documentation, or receiving timely updates on their loan status.
  • Over-indebtedness. Digital borrowers risk accumulating debt that exceeds their ability to repay it due to the ease with which borrowers can now get a loan. Over-indebtedness can have severe consequences, including legal actions by creditors, damaged credit scores, and personal stress.

Topic 7 Alternative sources of funding: Crowdfunding

Traditionally, if you needed a loan, the only option available to most of us was to talk to a bank or similar financial institution. But today, you can tap into alternative sources of funding, such as crowdfunding, including peer-to-peer lending, equity crowdfunding and rewards-based crowdfunding. To learn the differences, advantages and disadvantages of such  lending, read more: crowdfunding explained-ET0215043ENN.pdf


In summary, digital loans and credits provide easy and flexible ways to get money in today’s digital era. These new tools, found on websites or mobile apps, make borrowing simpler, removing the need for long paperwork and waiting like in old banks. Knowing how digital loans work is important for people to choose well and use opportunities while staying safe from cyber risks and not knowing about money. By using digital tools and learning more about them, people can manage money better and have a safer financial future.


  1. Simeneh, A. (2024). Digital credit process and the steps to obtain an instant loan. LinkedIn. Available at:
  2. Kagan, J. (2024). What is a Loan, how Does It Work, types, and Tips on Getting One. Investopedia. Available at:
  3. Zeeh Africa. (2024). Digital Lending: Simplifying Borrowing from Application to Repayment. LinkedIn. Available at:
  4. Aoki, K. (2023). Online Banks Vs. Traditional Banks: Which Are Better? Forbes. Available at:
  5. Šarkauskaitė, Ž. (2024). Traditional Banks in the Age of Online Banking. Forbes. Available at:
  6. Kagan, Ž. J. (2024). What Is a Loan, How Does It Work, Types, and Tips on Getting One. Investopedia. Available at:
  7. Bajaj Finserv. (2023). Waiting Period in Health Insurance. Available at:

Questions for self-assessment

Scroll to Top