According to a 2019 Credit Suisse report, millions of Indians use loan apps to gain financial assistance.
Taking advantage of this trend, cybercriminals target mobile phone users through unauthorized digital lending apps.
Such lending apps charge excessive interest rates, have unacceptable loan recovery methods, and can even misuse loan agreements to access data on a borrower’s mobile phone.
As an individual, it is essential to differentiate between legitimate/authorized lenders and illegitimate/unauthorized lenders.
Let’s look at some common ways that can help you recognize such fraudulent lending apps.
- Absence of RBI Recognition
This a common trait across all illegitimate lending apps online. The lending app needs to be registered with the RBI (Reserve Bank of India) or else it would be considered unauthorized.
Before you sign any loan agreement, you need to examine the agreement closely to see if the lender possesses any kind of certification to prove their authenticity.
The RBI announced the formation of a working group to regulate e-platforms and mobile apps that offer digital lending solutions.
- Non-Constricted Verification Process
Reputable financial institutions make it clear that they’ll need to look at your credit history and are serious about the lending business.
On the contrary, fraudulent loan apps do not have strict verification procedures and are least bothered about your credit history as their motive is to push you into a debt-trap.
They target high-risk borrowers and make money off of their misery.
- High Processing Fee On Loans
Fraudulent lending platforms tend to charge a high processing fee to increase their profit margins. These charges can be as high as 42 per cent.
In some cases, you might be denied access to other comprehensive details of payment and charges applicable on the loan.
It is advisable to look out for such suspicious activity and turn down the loan offer immediately.
- Improper Information Regarding Repayments
Before you sign the agreement, you need to go through the fine print and look up details regarding repayments.
Predatory lending apps will try to misrepresent loan details and often target desperate borrowers to make a haste decision.
You need to look out for such vague statements as a means to identify malicious digital apps.
- Unusual Ways of Loan Recovery
Usually, lending apps allow borrowers to make secure online repayments. Digital lending scammers will even ask you to deposit money through a loan recovery agent to lower their digital footprint.
Such behaviour is quite common among businesses that operate outside the law.
- Disregarding User Privacy
Fraudulent apps tend to ask for unnecessary financial and personal information, which is then used to jeopardize the borrower’s financial security.
Such lending apps offer zero protection, putting the users at risk of exposing their private information to identity burglars that misuse such data.
Lending institutions registered with the RBI and entities regulated by the state government offer legitimate loans while ensuring the borrower’s safety.
Today, there are numerous lending apps available in the marketplace. Hence, you must be able to recognize possible scams and safeguard yourself against fraudulent lending apps.
The purpose of a loan app is to make credit easily accessible and to facilitate a smooth application and repayment process.
The Finserv MARKETS app is one such app that is designed to cater to all your financial requirements. With the Finserv MARKETS app, you can avail PaySense personal loan online.
At Finserv MARKETS, the online application process is quick and eligible applicants can avail a Bajaj Finserv Personal Loan amount of up to Rs. 25 lakh at attractive interest rates.
At Finserv MARKETS, the eligibility for personal loans is simple with minimal documentation required.
Once you’ve applied for a loan, the app allows you to track the status of your loan application online. The repayment process for personal loans is flexible and ranges from 1 to 5 years.
With the help of the finance app, you can even make secure digital payments towards your loan.
Moreover, the money manager feature on the app helps you keep a track of your expenses and manage your monthly budget.
With the Finserv MARKETS app, you can avail personalized choices for loans, credit cards, insurance, and investments through UPI payments and with no-cost EMIs.