Instant lending apps have transformed the credit scenario by providing quick and easy access to finances with just a few clicks on your phone. However, as such apps have become increasingly popular in the financial landscape, so have the associated scams.
1. Registered and authorized by RBI
The Reserve Bank of India (RBI) regulates all formal lending activities in India. It is mandatory for every instant loan app to register with the RBI. This step is essential to ensure that such platforms adhere to the rules and regulations imposed by the central bank to protect borrowers from fraud. RBI’s nod would mean that the app follows every guideline issued in the interest of the borrower. A genuine instant loan app is registered with the RBI, as per all norms of RBI. The central bank can punish lenders who do not adhere to these standards.
2. Data security
Each instant app you download asks for specific data from your phone. Most real apps list the reason for any information they need to access. Be careful of apps that ask for unnecessary information and may violate your data privacy.
3. Contact details
Always check the contact details of the personal loan that you want to take out immediately. Also check the app provider’s website and address. A genuine lending app will be transparent by providing legitimate contact information and a verifiable address. Fraudulent lending apps will lack real contact details and physical presence.
4. Online reviews
Before downloading an instant loan app, check the reviews and ratings on the app stores. Apps with positive reviews and high ratings reflect their legitimacy, while negative reviews and low ratings show that the app is not genuine. This will help distinguish between authentic and fake lending apps. However, reviews and ratings may not be the best measure to judge the authenticity of a lending app as some reviews may also be fake.
5. Find a financial advisor
The best way to know if an instant loan app is legit is to contact a financial advisor. These experts can help distinguish between fraudulent and legitimate apps based on their knowledge and experience.
6. General terms and conditions
It is essential to read the terms and conditions to avoid falling into the trap of loan scams. A real instant loan will be transparent with the terms and conditions. It will provide necessary details such as interest rates, fees, repayment details, etc.
If the terms and conditions are unclear on such details, it could be a potential scam. Legitimate loan apps also list legal details, highlight necessary disclosures, and state the rights and obligations of lender and borrower. If these disclosures are missing or incomplete, proceed with caution.
Few signs of fraudulent instant loan apps
Lack of KYC
The Know Your Customer or KYC process is used by lenders to verify the identity of their customers. This process is mandated by the RBI. If your loan app is looking for KYC, it could be a scam.
Loan agreement
Fraudulent instant loan apps provide a loan agreement if you want to take out a loan. A loan agreement is a formal contract between the lender and a borrower that provides legal protection in the event that one party violates the terms.
Advance costs
Some instant loan apps may require upfront payments to approve your loan. Such apps are potential scams. Don’t pay any processing fees to approve your loan.
In conclusion, while instant lending apps have made taking out loans easier, they are just as likely to be a scam. Be diligent and careful before applying for a loan. Don’t be tempted by unrealistic offers that some fraudulent apps offer. Try to find a professional who can make informed lending decisions.
