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What are money lending apps and why you should stay away from them

Money lending apps offer easy loans but here is why they can be nothing but traps.

The COVID-19 pandemic led to a shortage of work and money for millions of people across the globe. As a result, they sought to numerous measures to get easy access to cash. Taking advantage of this compulsion, many mobile applications popped up calling themselves the savior, offering easy loans to people all over the world at almost no interest at all (to begin with). Apps like Cred also started lending money to people who are registered on its app. Read on to know why you should stay away from apps like these at all costs.

What are money lending apps?
What are money lending apps?

What are money lending apps?

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Money lending apps are mobile applications run by a person, a group of people, or a company for dispensing easy loans to the users of these mobile applications. To attract customers, these apps advertise their easy process of lending with minimum verification. Although the customers may have a false sense of opportunity, this gives a chance to these apps to create a trap by hiding their details and the terms and conditions of the loan.

Why should you stay away from money lending apps?

Recently, three people including a Chinese national were detained concerning money lending apps fraud case in Telangana. Under the pretext of giving instant loans, many Chinese apps have extracted huge amounts of money that approximately add up to Rs 21 thousand crores.

In a recent study, Reuters found that at least 10 money lending apps on Play Store violated Google’s regulations on loan repayment lengths meant for protecting vulnerable borrowers. Moreover, most of them also breached the central bank rules framed to protect borrowers.

Google recently examined several money lending apps on the Play Store and removed some of them that broke its user safety policies. It had been observed that many apps had appeared online without being governed by any rules or regulations. The most common method of these apps is to bring people into a debt trap, interest payments, and late fees to siphon money. In contrast to this, genuine lenders require document verification like KTC, PAN, Aadhar, mobile, and address. Before getting a loan, the customer is required to sign a contract with the registered bank or NBFC and undergo a credit bureau. This is not the case with a fraudulent lending company running an app. This gives a chance to them to indulge in aggressive collections calls charging heavy penalties on those people who find difficulty in paying back the loan.

Why should you stay away from money lending apps?
Why should you stay away from money lending apps?

If you are a victim of money lending apps, how can you file a complaint on National Cyber Crime Reporting Portal:

To file a cyberfraud complaint, you have to follow the underlying steps.

  1. Go to the Cyber Crime Portal.
  2. Click on the ‘Report other Cyber Crime’ option
  3. Click on the ‘File a complaint’ option.

Note that while complaining, you must provide accurate information for quick action. You may also contact the local police in case of an emergency. The national police helpline number is 100.

If you are a victim of money lending apps, how can you file a complaint on National Cyber Crime Reporting Portal
If you are a victim of money lending apps, how can you file a complaint on National Cyber Crime Reporting Portal?

How can you evade fraudulent money lending apps?

1) You should check the credentials of the money lending apps and ensure if they have RBI registered NBFCs or certified partners for distributing the loans.

2) Before you download the application, visit the app’s website to ensure that it is a genuine incorporated entity having a valid certificate of registration.

3) Always check if the app demands access to sensitive data including contact, bank credentials, and other passwords.

4) You should verify the true cost of the loan before giving consent to the agreement so that there are no hidden charges.

5) Never forget to do some research about money lending apps and their promoters.

How can you evade fraudulent money lending apps?
How can you evade fraudulent money lending apps?

Besides, India’s largest bank i.e. State Bank of India has also given some safety suggestions for its customers.

  • Check the terms and conditions of the offer.
  • Avoid clicking on suspicious links.
  • Check the authenticity of an app before downloading
  • Visit your bank’s website for all your financial needs.

It is worth noting that almost all banks in India keep sharing tips and with their customers regularly for safe and secure online banking as well as ATM transactions. They often caution you not to reveal your bank details to anyone even if he/she claims to be a bank employee.

The key to safe banking is vigilance. It is thus advised to keep unique internet banking passwords and not getting indulged in attractive loan offers advertised by money lending applications. 8 out of 10 times it is a trap and you will end up either losing your sensitive data, money or will be burdened with heavy hidden interest rates.

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