A personal loan can be a convenient option to meet the need for immediate funds. Whether it’s for a wedding, holiday, or an emergency, a personal loan offers quick access to money. However, when considering taking a personal loan from a fintech platform, it’s essential to exercise caution. According to reports, borrowers from fintech companies often complain about high interest rates, hidden penalties, and aggressive recovery tactics by company representatives.
Traditionally, personal loans have been taken from banks or financial institutions, but nowadays many fintech companies, such as KreditBee, Lendingkart, Paytm, MoneyTap and Groww, also offer personal loan services through apps. If you’re thinking of borrowing from one of these loan apps, there are some important factors to keep in mind.
Loans from Unregistered Fintech Firms:
The Reserve Bank of India (RBI) has published a list of non-banking financial corporations (NBFCs) authorised to provide loans. You should only take a loan from a registered NBFC or a fintech platform that partners with an authorised NBFC. Don’t be swayed simply by the number of app downloads.
Before obtaining a loan from a fintech platform, verify that the platform is recognised by the RBI and is legally permitted to provide loans. Many people make the mistake of borrowing from fintech apps just because of their popularity on platforms like the Google Play Store, but this can be risky.
In the financial year 2023, there were 1,062 complaints filed against fake loan apps, highlighting the importance of being vigilant. Furthermore, it’s crucial to choose a platform that offers excellent customer service. While loans can be easily availed through digital apps, having access to human support in case of issues is important. If a platform lacks a customer service department, it may be challenging to resolve any problems.
Sidharth Vishwanathan, Chief Risk Officer (CRO) of KreditBee, previously advised borrowers to take five essential precautions before using an instant loan app:
1. Verify the App’s Identity
Legitimate instant loan apps will have both a physical and online presence, such as a website and social media accounts. To avoid risks, always download apps from verified stores only.
2. Check for Regulatory Compliance
Ensure the app is partnered with an RBI-registered financial institution or is directly regulated by the RBI.
3. Data Privacy
Make sure the app protects your personal information and adheres to data privacy regulations.
4. Transparency in Information
The app should provide clear and transparent details about interest rates, fees, and repayment terms.
5. Loan Disbursal
Review how quickly and securely the loan is disbursed once approved.
By following these guidelines, you can safely navigate the world of fintech loans while avoiding potential pitfalls.
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