Here is why you should be careful with instant loan applications
Google India recently reviewed several personal loan apps on its Play Store and removed those that violated its user safety policies. Recently, several apps that do not seem to be governed by any regulations have appeared online. These apps require basic information from customers and make loans a snap.
With these loan applications, says Suman Gandham, founder of Finin, defaulters are forced to pay a fixed daily late fee in addition to interest. These companies are notorious for leaking data and turning to abusive confrontations to recover loaned money, leading to data breaches and abuse.
“The modus operandi of these companies is to push people into a vicious cycle of debt, interest payments and late fees to make money. This is one of the most important reasons why you have to be extremely careful about where and to whom they take out a loan. from, “opines Gandham.
On the other hand, legitimate lenders perform standard KYC verification, involving PAN, Aadhar, and mobile phone number verification, and the data is secure without any possibility of extracting other personal details.
“According to RBI, customer must sign loan agreement form with NBFC / registered bank and also perform credit bureau check. All of these critical steps are missed by fraudulent companies. This leads to calls. Payday loan companies end up imposing very heavy penalties on people who are not able to repay the loan amount they have taken out. Even a one day delay in repayment drives the lender to send screening officers to aggressively extract the amount, ”Anuj Kacker, co-founder, MoneyTap explains.
Here are the key things to consider before taking out a quick / easy loan from loan apps:
According to Satyam Kumar, CEO and co-founder of LoanTap, users should verify the credentials of loan applications and verify whether they have NBFCs registered by RBI or genuine partners to disburse the loans.
“It is crucial to differentiate between genuine lenders and illegal apps in order to meet needs without falling prey to fraudulent activity,” suggests Kumar.
Know the lender
“This means that clients should go to the lender’s website and make sure that they are a properly incorporated Indian entity with a valid registration certificate before deciding to download the app,” suggests Pinapala.
Additionally, customers should check if the app is requesting access to sensitive data such as the contacts phone book, which has been the source of many coercive collection attempts, and stop downloading such apps.
“Once a client chooses their lender, they need to make sure they know the actual cost of the loan before signing the agreement to see if there are any hidden fees and charges. So clients should prioritize legality, transparency and full disclosure rather than focusing on attracting quick approval, ”he adds.
Additionally, Shubhradeep Nandi, founder of Pichain Labs, suggests borrowers do some research on the company or its promoters beforehand.
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(Edited by : Jerome)
First publication: STI