Nowadays smartphones have become an integral part of our lives. Our smartphone can do many things in one click. Be it entertainment, whether it is online shopping, studies or social media- Smartphones have made all our work easy. The Internet has significantly changed banking. At first, the internet made possible online transactions but today we can take loans within minutes while sitting at home.
Nowadays many Instant Loan Apps have come into existence and made credit culture more popular. You also might have received many messages offering you a loan. But these apps bring a whole new set of problems with them. Today, we will tell you how these instant loan apps extort and harass users. But before discussing that you must understand:
What are Instant Loan Apps?
There come many times in our life when we suddenly need money whether it is medical related expenses or marriage of a friend or any other expense. In such a situation, if we want to take a loan from banks, then it may take us some time. In such a situation, the loan which we get quickly without many documents, we call that loan instant loan. We have to do a lot of paperwork while taking loans from banks, but the loan offered here is quick and collateral-free. The mobile apps that provide this type of Instant Loan facility are known as Instant Loan Apps.
Many of these apps do not have the authority to give loans from regulator like Reserve Bank, yet they are openly luring people by offering loans in minutes. During the lockdown, many such apps cropped up because many people lost their jobs. For such people, these apps came as a support, but they are playing the role of a devil in the guise of a monk. Most of such apps are from China and they have no affiliation with any bank or non-banking institution (NBFC).
How do they trap users?
When borrowers download such apps from Google Play Store and give access to their personal details (like photo gallery) and contact list. Telecallers of such apps call the customer and tell them that because of their good record, the company wants to offer them a loan. Many customers get caught in this trap and take a lot of loans without even a need.
Also read: Everything You Need To Know About The Educational Loan
Such apps charge an annual interest of 30 to 35 per cent. Besides, they levy a penalty of up to Rs 3,000 per day for not paying the loan on the due date. Because of this, many customers get caught in the trap of taking loans from other apps.
The loan repayment period of such apps varies from 7 days to a few months.
How do they harass customers?
After this, their tele-callers and recovery agents torture people in such a way that their lives become hell. These companies declare their late payers as defaulters by sharing the personal details of the borrowers on social media.
Users get harassed by dozens of calls. Then their family members are called, threatened and abused. Even after this, if someone is unable to repay the loan, then the customer is humiliated by calling the people on his contact list, friends, sending them WhatsApp messages.
Not only this, the personal information of users is also shared on social media for harassment. They are called cheaters. Fake legal notices are sent to them.
Reserve Bank has issued a warning
The Reserve Bank of India has warned customers to be aware about digital money lending apps that have come under question. Through such apps, many companies promise loans in seconds at attractive interest rates and then harass users.
What you should check before using any such app?
- Check whether loan offering entity is a registered NBFC or not
- The Reserve Bank has said that do not share your KYC documents to any such app or unauthorized person. The central bank has said that all digital lending platforms should disclose registration information to their customers.
- The name and address of registered NBFCs can be accessed on the Reserve Bank’s website and complaints can be lodged against the entities through the portal.
Better alternatives for loan
You can always choose other secure loan options like gold loan from government or leading private banks, personal loan from banks, loan against FD, loan against LIC policy, against PF from your institution or loan to employees.
Read more: Personal Loan: The medium size Loan