KOLKATA: The use of technology in the Indian financial sector during Covid-19 is at an all-time high. India also witnessed a record number of financial applications being launched in the same period.
According to a recent report by app analytics firm AppsFlyer, India had the highest number of banking app installs in the world from January 2019 to March 2021. India leads the globe with 1.49 billion financial tech apps downloads, followed by Brazil and Indonesia with 500 million and 400 million downloads, respectively.
Instant app loans, with their promise of real-time access to loans, appear to be more appealing (on the surface) than personal loans from traditional banks, especially for urgent needs.
The Ministry of Electronics and Information Technology (MeitY) has blacklisted 27 lending apps for violating RBI rules.
Borrowing hastily, on the other hand, could be the first step toward a debt trap and a ruined credit score.
The following is a checklist of items to keep in mind while applying for rapid loans using financial apps.
Loan sharks: Customers may find it difficult to spot questionable apps right away. Inquire about the effective interest rate, tenor, and penalty wherever possible. Don’t forget about the default terms and conditions. High processing costs and per-day penalties for defaulting on a loan can make borrowing a nightmare.
Credit check: Borrowing with no credit history might result in exorbitant interest rates, putting you in a perilous situation. As a result, if you don’t have a good credit history, you should limit your borrowing.
Conservative borrowings: Commit to your repayment capability and only borrow what you can afford to repay with your own money. Besides a carefully planned consolidation loan from a registered bank or NBFC, you must never borrow to repay past loans.
Verify lender’s credentials: Before disbursement, a credible lender will discuss the terms openly and share a sanction letter, loan agreement, and EMI amortisation schedule. A fraudster, on the other hand, will have every motive not to reveal their license and policy documentation.
Advance payments and push for quick decision: Another red sign is online software that requests money in advance or fees before disbursing loans. Playing into the clutches of a pushy lender is a bad idea.
Protect your data: A lending app will always ask for your permission and explain the action it intends to do with your information. Your smartphone is a haven for your personal information, photos, and other sensitive data. Take a moment to think about the type of permission you’re granting. An app that does not provide information should be avoided.
Seek professional help: Sign up for a loan marketplace website or app and shop around for the best deals. The lending marketplaces are also not directly regulated by the RBI. They do, however, choose their loan partners with caution. Without any additional expenses, a loan expert will advise you on loan eligibility, interest rate, and terms and conditions.
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