With so many fintech companies willing to offer small loans, borrowers risk getting lost and falling for scam loan apps offering instant credit online.
After the outbreak of the Covid-19 pandemic, many people faced job losses or pay cuts as businesses took a severe beating. Moving to a lower pay scale overnight is nearly impossible and dreadful. Many people have turned to borrowing to meet the most basic requirements.
To make ends meet, millions of Indians are downloading quick borrowing apps. Cybercriminals are taking advantage of this by inventing new techniques to defraud cellphone and computer users. With so many fintech companies willing to offer small loans, borrowers risk getting lost and falling for scam loan apps offering instant credit online.
As these numbers continue to rise, knowing how to identify genuine fintech lenders has become crucial.
Here are some tips that will help you determine the legitimacy of loan applications:
Check credentials: A borrower should verify the credentials of the lender and only work with a RBI-Registered lender whether bank or NBFC. Ratings and reviews are important; When choosing a lender, it’s a good idea to look at ratings and reviews. This will give the borrower a good idea of how the lender operates, and any unethical behavior by the lender will be reported by previous borrowers.
Access to personal data: Some lending apps require gallery and contact access to perform subscription and authenticity checks. The responsible lenders keep this information confidential and avoid at all costs disclosing it to third parties. In today’s environment, lenders have become highly capable in terms of underwriting systems and adherence to approved collection processes. This eliminates their reliance on contact lists or gallery access, thus ending any fraudulent activity. Additionally, responsible digital lenders ensure the security of their data by conducting information security audits and regularly monitoring AI functionality. Awareness is your best defense. Do your due diligence.
The lender’s website is not secure: When you visit a lender’s website, look for a padlock icon on all pages where you are asked to provide personal information. HTTP:// websites are secure because they are protected from identity thieves who steal personal information and resell it to others. A reputable lender will protect you from loan scams by ensuring that your data is secure and will not leave your information accessible to others.
Physical address: The app/fintech you plan to borrow a loan from must have a physical address. If you cannot find any legitimate physical address, you should avoid the loan. Many loan fraudsters prefer to remain anonymous to avoid legal repercussions.
Initial costs: Many smaller lenders charge an initial application fee or membership fee ranging from Rs. 100 to Rs. 400 on their applications. Once the borrower provides the fees, they are redirected to other applications where they can apply. Since many of the smaller loan apps don’t have a website or aren’t even licensed, they work with other larger lenders. Keep this in mind before focusing on the lender.
While loan apps can be a fantastic way to get a quick loan, it’s essential to protect yourself against many fraudulent fintech loan apps. It is also important in these times to be financially conscious and digitally savvy to avoid illegal lenders and only borrow from RBI registered sources.
by, Madhusudan Ekambaram, Co-Founder and CEO, KreditBee and Co-Founder of FACE
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