Loans From App Based Lenders Can Hit You Hard

Getting quick financing is a significant advantage of living in a globalized economy. Everyone who lives here on earth should have access to money when they need it. In India, the role of the lender is increasingly being taken up by fintech lenders who use personal apps.

Why is Personal Loan Apps doing so well in India?

There are several reasons why the public has taken to personal loan apps. Some of them are:

1) Easy to use:

Most of these apps come tailor-made for new customers. In fact, because of how smarty these apps have been designed, it is straightforward for even someone who is not technologically gifted to use them. Some apps also have specially made video tutorials teaching new users how to navigate through their apps.

2) Efficient documentation process:

Online lenders such as those who give loans through apps have an effortless manner of verifying documentation. You will not be asked to make multiple trips in rush hour traffic just so that you can share important documents. Everything can be uploaded online and without coming in contact with anyone on the outside.

3) Rapid disbursal of Loan amounts:

After being approved for the loan, most fintech lenders will send the money to your bank account within 24 to 36 hours. All you need to do is give the lender your bank account details while completing the loan application on their instant loan app.

4) Competitive interest rates:

All online lenders are currently competing with each other to secure a very niche market. The fintech India over the last four years has grown from a minute 22 billion USD to now reach a massive 73 billion USD. At this rate, by 2024, the fintech industry could reach sizes of up to 250 billion USD. It is because of this competition that lenders are offering up desirable rates to lure customers to their instant loan apps.

What are the dangers of loans from online apps?

1) Taking on too much debt:

As it is with any form of easy money, it is convenient to use debt, but almost impossible to get yourself out of the bottomless pit it throws you into. Because these apps allow customers to borrow money very quickly, people tend to forget that the funds received are still not their own.

2) Most lenders have aggressive recovery tactics:

There have been reports where people who got these easy loans have failed to make a complete repayment of their debt. Once you default, the lender might end up resorting to extortion tactics to recover the bad debt. There have been stories where the borrower’s family members and friends have been called and harassed to recover the money. This was done through the mobile contacts accessed by the app.

3) High Penalties on Late EMI Payments:

Much like credit card debt, the interest and penalties on easy loans are very high. You could say that individual fintech company have more significant late payment penalties than banks. If you somehow find yourself falling in a debt trap, the penalties and principal will compound at a scarily fast rate making it even harder to get out of this slouch.

Conclusion:

It is essential to realize what you are getting yourself into when you avail loans through these fintech companies. These lenders are a great source of money for people who need it, and they are a critical player in the financial sector. However, to have a good experience with these companies, it is paramount to read all the terms and conditions beforehand and not take loans that you will not be able to repay.

Also Read: How Much Income Required for Instant Personal Loan Approval?

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