How To Verify If a Personal Loan App Can Be Trusted: 5 Expert Tips

Whenever an individual is confronting a serious cash crunch or financial crisis and is in need of urgent money, instant personal loan apps can be their saviour. In today's fast-paced world, these apps are among the most convenient ways to borrow money. As these are uncollateralised, comes with easy repayment facility and is convenient to apply, personal loan apps have become the go-to option for many individuals to borrow money.

To be eligible for a personal loan with an attractive interest rate, you must have good credit and a CIBIL score between 300 to 900. The higher the score, the better your chance of successfully securing the loan.

Recently, there has been a surge in the number of personal loan apps readily offering hassle-free and instant loans. But with digitalisation, certain risks are often unavoidable, not to mention the ever-increasing fraud activities. So, you must choose the most secure and trusted apps to avoid getting trapped in fraudulent activity. Read below to learn the best ways to identify a genuine loan app.

Why Are People Choosing Personal Loans Apps Over Banks?

More people are attracted to personal loan apps over banks for good reasons. Unlike applying for a loan from a bank or non-banking finance firm, apps are less time-consuming and have their due diligence process. These mobile loan apps require no paperwork and are completed in seconds. This is rarely the case with banks or other financial institutions, where you must go through a pile of paperwork and documentation and then wait for it to get approved, making the entire procedure time-consuming.

However, there's a catch with loan apps that often renders them risky compared to banks. While you may borrow a lot from personal loan apps in minutes, such apps may not offer them legitimately. Instead, they charge a high interest rate and collect personal confidential data, posing a risk of misusing the user's information. Therefore, borrowers must be extra cautious while using such personal loan apps.

5 Tips to Choose a Trusted Personal Loan App

Here are a few ways to know how a personal loan app can be trusted:

Presence Of an Offline Address and Website

When contemplating using a genuine loan app, it's crucial to authenticate its legitimacy to safeguard your personal information and financial resources. One crucial element to investigate is the physical location of both the application and the lending institution. This could raise suspicions if you cannot locate the lender at a registered address.

Genuine lenders typically exhibit transparency by providing their name, phone number, physical address, and email address on their websites. Also, you must research the app's parent company. If the loan application lacks a website, it may signify a potential scam involving instant loans.

Interest Rate, Repayment Terms

Borrowers must carefully assess the interest rate offered by the lender. If it is significantly higher than the prevailing market rates, be cautious and reconsider dealing with such a lender. Furthermore, if the lender lacks transparency, they are likely to:

  • Charge a higher rate of interest
  • Approve the loan without proper verification
  • Request a loan fee before disbursing the funds

All these may indicate that the lender is not authentic and could be engaged in fraudulent activities.

Ensure The App Is Partnered With RBI

The most reliable and secure instant loan apps are either in collaboration with financial institutions that hold partnerships with the Reserve Bank of India (RBI) or these apps directly affiliated with the RBI itself. Confirming whether the app has partnered with the RBI is crucial because this connection is a prerequisite for any rapid loan app. It is illegal to give loans without the required RBI authorisation.

Check For Reviews and Ratings Online

Ratings and reviews have frequently been shown to be helpful tools. Before deciding to borrow from a certain app, looking for favourable feedback from at least 10 users, ideally with ratings of 4-5 stars, is essential. On the other hand, unfavourable evaluations are warning signs of possible misconduct or operational inefficiencies. Thus, it is best to avoid such applications.

Final Verdict

Now that you know how a personal loan app can be trusted, it's essential to consider the aforementioned factors when evaluating various instant loan apps. First, the app has to be authorised by the RBI and have either a local office or a website updated regularly. Furthermore, it is essential to have the required paperwork, including terms and conditions, available in case of any unanticipated occurrences.

A secure and frequently profitable option in times of financial necessity, an instant loan app offers rapid and effective approval processes and the possibility of incentives through enrollment.