With digitalization, all service providers have switched to mobile apps to offer better services to their customers. Banks and non-banking finance companies have shifted to secure apps to give their customers the convenience of applying for their loans and accessing their accounts through their smartphones. Loans availed through mobile applications save a considerable amount of time for users, like less documentation and other paperwork. Additionally, the emergency cash is credited almost instantly.
That being said, you cannot trust all personal loan app lenders who have a mobile or web application. Do not trust any app or platform that the RBI does not authorize. The RBI advises consumers to proceed with caution before applying for a personal loan with any app-based lender.
There have been many news articles about instant loan apps scamming Indians. According to recent loan app news by India Today, several money lending scams came to light like Cash MaMa, Dhana Dhan, Cash Elephant, Loan Zone and many more apps which offered instant loans charging hefty interests. Additionally, when granted permissions during installation, they misused user data and threatened them over calls.
So here are a few tips to find out if your online loan app is legitimate or a scam before taking a personal loan from them.
Check Whether Selected Loan App is Legitimate or a Scam:
- Verify Your Lender Credentials
Research the credentials of your lender before applying for a loan with a financial institution. Identify if your lender is authorized and registered with the RBI. Legal lenders who the RBI authorizes follow the strict protocols laid down by them while working with borrowers. Genuine lenders adhere to RBI guidelines that benefit borrowers like non changing if prepayment penalties, lower interest rates etc. such guidelines from RBI work towards the borrower’s welfare and give them the best possible experience.
Additionally, all lenders registered with RBI are bound by privacy rules and keep their data safe.
- Look For Their Website
Any vendor who does not have a website to its name is not trustworthy. Check for HTTPS in the URL. A reliable lender would make sure the website is secure. Most illegal apps don’t have a registered website with them.
- Verify Their Physical Address
Every lender should have a registered address, email id and phone number. An illegitimate loan app will not have a registered office to its name.
- Rate of Interest
Fraudulent personal loan apps offer higher interest rates as they do not come under the RBI and hence do not adhere to the guidelines. Compare the interest rates with others and check for their reviews on the web. Additionally, check if the lender is transparent about the loan interest and the terms.
- The Lender Is Not Concerned About Your Repayment History
Fraudulent apps are not concerned about your documents or your credit scores. This is always a red flag, as it is most likely a scam. Fraudulent apps that collect personal data to misuse them for unlawful practices are mostly not bothered about your repayment history or document authenticity. They want you to be associated with them.
- Lack of Grievance Redressal System
A genuine lender always has a sound customer care system to address all customer grievances. They adhere to various KYC regulatory guidelines and collection practices made by the RBI to protect customer identity.
- Check For Online Reviews
Check for your lender’s reviews online in Quora and Google Play Store. These will give you an idea of the concerns and benefits of the lender. Download the app only from the app store instead of the lender’s website.
- Genuine Lenders Check your Credibility
Apart from these, watch out for fraudulent lenders promising guaranteed approval without checking your credibility. It is a sure red flag. Genuine lenders evaluate your credibility and repayment capacity before proceeding with the loan process. Additionally, they pressurize you to take immediate action and install their app or take a loan.
Technology sure has its boon and bane. A genuine financial institution strives to keep its customer data secure with advanced technology and security. With so many illegal lending apps mushrooming now and then, it is imperative to watch out for the above tips so as not to fall prey to them.
Watch out for fraudulent apps and go for trusted lenders. Fullerton India is a registered non-banking finance company with 645 branches across India that RBI authorizes. We offer transparency and integrity to our customers for over a decade. Install our Instant personal loan app for a secure hassle-free experience.