We live in the era of smartphones, quick commerce and getting things available at the swipe of a screen. It has impacted lending too, and efficient instant loan apps are emerging as a quick and efficient solution for those seeking fast and hassle-free funding.
However, as these apps become more popular, incidents of fraud and misuse of personal information have seen a marked increase.
Job losses, financial uncertainties, and escalating medical expenses drive many individuals to seek financial assistance through dubious loan apps, and make them susceptible to fraud and scams.
To avoid falling victim to a few unscrupulous apps, one must be wary of red flags such as unsolicited approaches, pressure tactics, overwhelmingly negative reviews online, and deals that seem too good to be true. Conducting thorough research and considering the experiences of other borrowers can help identify potential scams.
Moreover, borrowers should take basic hygiene steps that include avoiding public Wi-Fi and shared computers, only accessing authorised online instant apps, uploading legitimate documents and making payments carefully.
While regulatory authorities are taking steps to address the issue, borrowers can follow these steps to protect themselves and keep their money secure.
RBI authorisation for instant loan apps
The apps operate under the Reserve Bank of India (RBI). A key indicator of an instant loan app’s authenticity is its compliance with RBI policies, including partnerships with authorised banks and other non-banking financial companies (NBFCs). To verify legitimacy, borrowers can cross-check information offered by the instant loan app with the official websites of relevant NBFCs.
Have a functional physical address
A transparent and genuine physical address is crucial. Fake loan apps often operate in obscurity, sans proper addresses. Exercise caution if the address is incomplete, non-existent, or outside the country. Stick to legitimate platforms collecting only essential Know Your Customer (KYC) details.
Stay away from apps asking for unnecessary permissions
Legal instant loan platforms tend to adhere to collecting only basic Know Your Customer (KYC) details. On the other hand, illegal instant loan apps seek excessive information and permissions, which can be misused. Borrowers should be wary of apps requesting access to personal data such as phone contacts and photos.
Loan Agreement
Potential borrowers must scrutinise the loan agreement. Legitimate online lending apps provide essential details like the lender’s name, processing fees, annual interest rate, penalties for default, and a clear repayment schedule.
Advance payment warning
Regular loan apps deduct processing fees directly from the sanctioned loan amount to streamline the process for borrowers. Be wary of upfront payment demands. Any app demanding upfront payments before approval is likely a scam. Borrowers should be cautious of such demands.
A solid online presence
Verify the app’s online presence. Legitimate platforms have official websites providing comprehensive information. Ensure the website begins with ‘https’ for a secure connection.
Legal loan apps like KreditBee prioritise creditworthiness with proper documentation, including KYC, employment status, income proof, PAN details, and bank statements. Beware of fake instant loan apps approving loans without these essential documents, and be cautious of usurious rates.
Individuals can ensure a safer borrowing experience in the digital age by staying informed and cautious.
