With the Digital India initiative, a wide range of services have gone online, and banking services have seen a major shift towards digitization. Everything from opening accounts to securing loans can now be done from the comfort of your home. In line with this shift, digital lending apps have emerged, offering loans to customers who are often turned away by traditional banks. These platforms tend to charge higher interest rates but offer loans with minimal documentation. However, without a clear understanding, taking a personal loan from these digital apps can lead to significant financial troubles.
Why Should You Be Careful with Digital Loan Apps?
Digital loan apps tend to offer loans with exorbitant interest rates and hidden charges. The interest rates can be substantially higher than those of traditional financial institutions. The app operators are often aggressive in collecting the interest and principal, resorting to harassment tactics to recover the money.
Experts advise extreme caution when using digital loan apps.
Here’s Why You Should Be Cautious:
- Excessive Interest Rates & Hidden Charges: The loans offered by these platforms often come with sky-high interest rates and hidden charges that aren’t always disclosed upfront.
- Risk of Harassment: If you miss payments or even if you don’t, many of these operators will use harassment techniques to pressure you into repaying quickly.
- Unlicensed Apps: Some digital loan apps are not officially licensed, which can expose borrowers to scams and financial loss.
Expert Advice:
- Always choose loans from recognized and licensed financial institutions or banks.
- Avoid apps that ask for personal information or access to your device without a valid reason.
- Carefully review the interest rates, terms, and conditions before committing to any loan.
By following these tips, you can protect yourself from the potential dangers of digital lending apps.
