A Beginner’s Guide to Avoiding Fraudulent Loan Apps

India has ushered in a digital revolution in the last two decades. As a result, it has transformed how we communicate, shop, and transact every day. For instance, the rise of digital payments through tools such as the UPI (United Payments Interface) has brought India closer to becoming a cashless economy. But the transition comes with its own set of challenges. Google deleted over 2,200 fake loan apps from its Play Store between September 2022 and August 2023. This action highlights the need for safe practices one should follow while using online apps to apply for loans.

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How to Spot Fake Loan Apps

The ubiquity of fake loan apps makes it challenging to tell a legitimate app from an illegitimate one. But here are a few things you should keep in mind before signing up:

1. Evaluate the Lender

Every legitimate firm has to be registered with the Reserve Bank of India (RBI) to operate in India. Ensure the loan app you are using is registered with RBI. Some key factors to look out for are physical addresses mentioned on their website, legitimate phone numbers, email addresses, etc. Also, check if their website is secured or not—another indicator of authenticity.

2. Verify the App

Google and Apple regularly revise their security policies when it comes to loan and banking apps. For example, Google recently revised its loan app policy to only allow apps published by Regulated Entities (REs). Therefore, avoid apps from third-party websites and stick to those that have gone through Google or Apple’s security checks.

3. Check the Terms and Conditions

Most of you may dread this, but it is important to read the fine print before you sign up for any loan, especially when it comes to interest rates, fees, and repayment schedules. Fraudulent loan apps are likely to charge exorbitant interest rates and fees and hide these details in the fine print.

4. Gauge App Reviews

The reviews of any app are often a good indicator of its reliability. These reviews are usually written by app users and should be a factor in your decision. Do not opt for an app with overwhelmingly positive or negative reviews, as that may indicate fake reviews spammed by bot accounts.

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What Should You Keep in Mind While Taking a Personal Loan?

Personal loans are a crucial financial instrument to secure funds for important purposes like medical expenses, home renovation, etc. Keep the following factors in mind while securing them:

1. Loan Terms

Thorough research is key to determining credibility. It is important to compare the interest rates of different lenders to find the best deal. Review the repayment schedule and do not go for companies with inconsistencies in their documents. Consider using tools like OneScore to keep track of your loan payments.

2. Lenders’ Reputation

All financial institutions that provide loan services must be registered with the RBI. Avoid choosing offshore lenders that do fall under the RBI’s purview or that operate solely through an app. Furthermore, another way to gauge a lender’s reputation is to find out about the experiences of those who have borrowed from the same institutions in the past.

3. Information Security

The security of your financial data should be a crucial factor in your decisions. Details like account information can be misused if they fall into the wrong hands. This information is tied to other personal data, such as your mobile number, address, etc. Choose firms that offer data privacy and provide a mechanism to complain in case of a data leak.

Many fraud apps continue to evade regulatory action, so you must do your due diligence before signing up for any loan app and opt for RBI-approved lenders. To get the best possible loan terms based on your credit score, use OneScore- a credit score management app trusted by over 35 million Indians. In conclusion, it is important to be alert while conducting any financial transaction online, especially when borrowing funds.