Google India recently reviewed several personal loan apps on its Play Store and removed those that violated its user safety policies. Lately, several applications that do not seem to be governed by any regulations have appeared online. These apps require basic information from customers and issue loans in a jiffy.
With these loan apps, says Suman Gandham, founder of Finin, defaulters are forced to pay a fixed late fee per day 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 it have to be extremely careful about where and who they take a loan from,” Gandham believes.
On the other hand, legitimate lenders perform standard KYC, involving verification of PAN, Aadhar and mobile number, and the data is secured with no possibility of extraction of other personal details.
“According to the RBI, the customer must sign a loan agreement form with the NBFC/registered bank and also complete a credit bureau check. All these critical steps are missed by fraud companies. This leads to calls aggressive collection agencies and these payday loan companies end up charging very heavy penalties for people who are unable to repay the loan amount they have taken in. Even a day’s delay in repayment leads the lender to send enforcers to aggressively mine the amount,” Anuj Kacker, Co-Founder, MoneyTap explains.
Here are the key things to consider before getting a quick/easy loan from loan apps:
According to Satyam Kumar, CEO and Co-Founder of LoanTap, users should check the credentials of loan applications and check if they have RBI registered NBFCs or genuine loan disbursement partners.
“Differentiating between genuine lenders and illegal applications is crucial in order to meet needs without falling prey to fraudulent activity,” suggests Kumar.
Know the lender
“This means that customers should go to the lender’s website and ensure that they are a duly incorporated Indian entity with a valid registration certificate before deciding to download the app,” Pinapala suggests.
Additionally, customers should check if the app is requesting access to sensitive data like phonebook which has been the source of many coercive harvesting attempts and stop downloading such apps.
“Once a client has chosen their lender, they should make sure they know the true cost of the loan before signing the agreement to find out if there are any hidden fees and charges. Thus, clients should prioritize legality, transparency and full disclosure rather than focusing on luring quick approval,” he adds.
Additionally, Shubhradeep Nandi, founder of Pichain Labs, suggests borrowers do some research beforehand on the company or its promoters.
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(Edited by : jerome)
First post: STI