The rise of digital finance has created a growing demand for convenience, speed, and security in transactions. Today, people prefer using technology to access financial services, whether from banks, online loan platforms, or other financial services.
For online loans, technology eliminates the need for face-to-face meetings between borrowers and lenders. In this process, digital signatures play a crucial role in validating documents. One example of a digital signature in online loans is signing loan agreements.
So, how can digital signatures be used in online loans? What are the different types of digital signatures, and which documents require them? Let’s dive in!
In everyday terms, digital signatures are often mistaken for scanned or photographed handwritten signatures placed on a document.
While this definition isn’t entirely wrong, it’s incomplete. A digital signature like this is considered uncertified. Meanwhile, a certified and tamper-proof digital signature involves more sophisticated technology.
Digital signatures are categorized into two main types based on their security level and legal validity:
This type of signature is a simple electronic signature, typically a scanned or photographed handwritten signature placed on a document. Since it lacks strong security measures, it’s called an uncertified signature. While it may be used for informal documents, it is highly vulnerable to forgery.
A digital signature is another term for a certified electronic signature. This type of signature uses cryptographic technology to ensure the authenticity, integrity, and security of electronic documents. Digital signatures are equipped with an Electronic Certificate that links the signature to the signer's unique identity.
Electronic Certificates are issued by accredited Certificate Authorities (CAs) such as VIDA. This type of signature offers a higher level of security by using Public Key Infrastructure (PKI) technology and is legally recognized under Indonesia’s Electronic Information and Transactions Law (UU ITE No. 11 of 2008).
A digital signature in online loans is required when submitting loan applications. Here are some key benefits for both platforms and users:
Digital signatures on online lending platforms come with encryption technology, ensuring that documents cannot be altered once signed. This system also detects any modifications and flags the document as invalid.
With digital signatures, there’s no need to print or send physical documents. Both borrowers and lenders can electronically sign documents within minutes, speeding up the loan approval process.
Online lending platforms can significantly reduce operational costs related to printing, shipping, and storing physical documents.
Using digital signatures reduces paper and ink consumption, making it a more sustainable option.
A certified digital signature with an Electronic Certificate holds the same legal standing as a handwritten signature, increasing trust between both parties in the transaction.
Read more: Easy and Secure Free Digital Signatures
Now that you know how digital signatures work in online loan transactions, let’s explore the types of documents that often require digital signatures to ensure legal validity.
This contract outlines key loan terms, including loan amount, interest rates, and repayment schedules. When both the borrower and lender sign with a digital signature, the document becomes legally binding without requiring a face-to-face meeting.
This document is used if the borrower authorizes a third party to manage the loan on their behalf. A digital signature ensures the document’s integrity, preventing unauthorized modifications.
Once the loan is approved, this document requires a digital signature to confirm the borrower’s agreement to the loan terms. With an Electronic Certificate-backed digital signature, borrowers cannot later dispute the loan they applied for.
This document serves as proof of payment or loan repayment. A digital signature legally validates the document and ensures it cannot be forged.
Read more: Understanding Digital Documents
VIDA is one of Indonesia’s accredited digital signature providers. VIDA’s digital signature solution offers several advantages, making it the top choice for online loan transactions:
VIDA uses advanced encryption and liveness detection technology to ensure documents can only be accessed and signed by the rightful owner.
To use a digital signature, users simply need to complete an ID verification (KTP) and biometric verification (such as face recognition) to obtain an Electronic Certificate for signing.
VIDA’s solution integrates seamlessly with various online lending platforms, ensuring a smooth user experience.
Digital signatures are a modern solution that provides security, efficiency, and legal assurance in online loan transactions. With the right type of digital signature, essential documents such as loan agreements and credit approval letters can be completed quickly and securely.
Online loan platforms that use VIDA digital signatures can provide maximum protection for users while creating a safer and more efficient lending ecosystem.
For those looking for a legally recognized, local solution, VIDA Sign is the best choice. Start using VIDA Sign today!