With the propagation of smartphones in each and every Indian family, the concept of digital lending has become a big hit. In a situation where the need for a loan is as diverse as to cover medical bills and school fees, borrowers are opting for loan apps as a convenient way to get their money and get it fast. Nevertheless, loaning through such types of apps is followed by a growing anxiety: Can we really say that loan apps are secure?

The Indian digital lending industry is growing at such an immense rate that it is quite hard to believe that it has not attracted the eyes of those who look for the moon and release hundreds of problems into the world. This proves how the industry problems of data privacy, usurious interest rates and unlicensed lending have also been on the news. Before you decide to apply for a loan through an app, here is all you should be aware of to be both financially and digitally secure.

The Convenience That Comes with Risks

Through loan apps, users have easy access to what typically banks do not provide, and one of such things is speed. By using that approach, many platforms assure their clients of not only having the loan approved within just a few minutes but also profit disbursal in a couple of hours, all this is achieved with virtually no documentation and no branch visits required. This makes the generation of young professionals, self-employed people, and those who have a low credit rating the one that is highly desired by those platforms.

However, the same convenience that has attracted consumers has also brought in some not very reputable operators.

This is why it is necessary to learn how to recognize a trustworthy and legal website before you click on ‘Apply’.

Signs of a Legitimate Loan App

Not all digital lenders are like that. There are many regulated financial institutions and RBI-approved NBFCs that provide legitimately secure and compliant lending through their mobile apps. Here’s how you know a loan app is legit:

• Regulatory support: You can check the app’s association with a Reserve Bank of India (RBI) regulated bank, or NBFC. As a rule, trustworthy applications display information about their finance partners and licenses on their official websites or apps stores.
• Minimal permissions: You should avoid an app that wants to access your contact list or photos, for example. A secure app will request only the necessary information to confirm your identity and facilitate the loan.
• Clearly defined rules: An honest app will present the annual interest, duration, the structure of EMI, and the amount of penalty for delay in a clear and understandable way. If some of these disclosures are either absent or are in tiny print, this is a warning sign.
• Customer service: Choose the applications that provide customer service chat, email, or helpline numbers as dedicated support channels which can help you to solve any questions or issues.

Further, you can read reviews and ratings that are available on Google Play Store or Apple App Store to understand the user experiences.

RBI Guidelines on Digital Lending

To address the rising concerns, RBI has issued established procedures that need to be abided by all the lending apps. These include the following:

• Declare the name of bank or lending NBFC publicly
• Supply the borrower with a digital loan agreement
• Transfer the loan amount right to the borrower’s account
• Repay only through the authorized entity and not through unfamiliar e-wallets

Needless to say, no data collector of the financial service is allowed to go beyond the consent of the data owner for accessing the mobile during the process irrelevant to the loan or for harassing the owner with irrelevant things.

The banks recommend the clients to download the applications from the official website of the Reserve Bank of India or banks which are the members of INDI.

Points to Review Before Any Lending

If you are one of the persons who has decided to use a loan app, let’s suggest you follow these checks for sure:

• Check the authenticity of the app: Try to avoid downloading apps that are shared through unofficial sources like links and social media. Use only the apps that are available on approved app stores.
• Get familiar with the terms: The app’s inbuilt loan calculator can be used to know the compound interest, total payments, and the extra charges. If you are confident about the interest rate and all fees, then the terms are known to you.
• Check the options for repayments: Besides getting information about the different EMI payment options, it is important that the app sends you reminders and does not forget to provide them.
• Understand the amount: Never borrow more than you actually need and be sure that you can make all the payments without any difficulty.

If unsure, do not jump into any sort of decision in haste. While a loan with low rates and a short-term may seem a better option, also remember to look out for applications charging secret costs and reclaiming the credits in a forceful manner as this might make you feel anxious and result in financial strain.

Ways to Save Your Personal Information

Before you say ‘yes’ or allow any app to get into your accounts, ensure that the privacy statement is clear to you. It is important that the policy gives you a clear picture of the information collected, its use, and whether it is shared with other parties. Under no circumstances, should you disclose your camera roll, location, or contact list to any app if it is not absolutely necessary.

Another way to monitor app behavior is to use the existing phone permissions. If, after you have installed a new app and the latter demonstrates some shady activity, e.g. you receive texts without your consent, the device becomes slower, or ads are running spontaneously, then it is a good idea to remove the app and change your passwords as a security measure.

It is also wise when submitting your financial information to avoid the use of unsecure public Wi-Fi.

Final Thoughts

The development of loan apps has definitely made the borrowing process quicker, more convenient, and much more ecological. It comes with a digital habit, though, that people must use their technology responsibly. By downloading a loan app from a reliable source, reading and understanding all information properly, and securing the personal information you have, you can safely get the credits you need and, at the same time, protect your financial status.