Imagine facing a sudden medical emergency... What do you do, and where do you find the necessary funds? Life often throws unexpected situations our way, demanding immediate financial solutions. This is where people find themselves entangled in the web of instant loan apps. As the name suggests, Instant Loan Apps provide quick loans almost immediately. They do not require extensive documentation and are not time-consuming. A click on your mobile phone, and within minutes, the funds are in your account. However, many do not consider the safety of these apps. Recently, several families have lost their loved ones due to the risks associated with these instant loans, highlighting the need for caution.
Quick Cash, But at What Cost?
In today's world, whether it's a student trying to pay college fees or a family managing medical bills, instant loans are accessible. The standout feature of instant loan apps is their transfer speed – some apps can transfer money in just 10 to 30 minutes. All you need is a smartphone, a couple of identification proofs, and a photo. Although several apps are RBI-approved, a multitude of suspicious apps lure people in with attractive advertisements and offers.
Source: aajtak
Numerous individuals fall prey to this trap. Experts reveal that many borrowers are enticed without questioning, drawn by the promise of immediate loans. However, such loans often come with exorbitant interest rates and tight repayment cycles. When timely repayments are not met, borrowers resort to taking loans from other apps to repay the initial loan, resulting in a cycle of debt and mounting stress, which continues to escalate.
The Onset of Threats
According to a report by India Today, Yashoraj Tyagi, the CEO of CASHe, explains the underlying risks and truth behind this. He mentions that the predominant risk is falling for irregular or fake apps in haste. Such apps usually charge excessive interest and conceal numerous additional fees. Moreover, once trapped, aggressive recovery methods are adopted to collect the loan along with the heavy interest.
Borrowers who get trapped by dubious and fraudulent apps face further issues when their personal data starts being misused. In case of payment defaults, these apps reach out to your contacts using this data, and do not hesitate to message your family and friends to escalate pressure on you. This leads to a barrage of threats. Imagine how life would be if you start receiving untimely threatening calls due to a minor loan and missed payment.
Source: aajtak
Not Just Isolated Incidents, But Many Tragedies
There are numerous instances of lives destroyed due to Instant Loan Apps, with 2023's Bhopal case being particularly heartbreaking. This family-friendly quick loan ended in tragedy when an entire joyous family succumbed to the pressures and took their own lives, including a husband, wife, and their young kids. The head of the family had merely fallen into the trap of Loan Apps, and despite all efforts, couldn't escape. Feeling cornered, he left behind a 4-page suicide note before ending his family's life. Following this incident, the RBI introduced new guidelines on instant loans and took action against fraudulent apps.
Major Downsides to Instant Loans
Extremely high-interest rates, much higher than what banks charge.
Missing just one EMI can result in hefty penalties.
Taking loans from Instant Loan Apps could damage your credit score.
Unregistered apps can steal sensitive data and information.
They can resort to blackmailing borrowers in case of payment defaults.
Under the pretense of offering quick loans, they deduct heavy taxes and hidden charges.
Things to Keep in Mind When Taking a Loan
Ensure the app is connected to an RBI-registered NBFC or bank.
Only borrow from reputable fintech and microfinance institutions when in need.
Some cooperative and small finance banks offer emergency loans at reasonable rates.
Read all terms associated with taking a loan through the app thoroughly.
Use reputable stores like Google Play or Apple App Store for downloads.
Read reviews and check the app ratings carefully.
Make sure the loan terms, interest, and customer help information are clearly listed.
Avoid granting unnecessary permissions (like contact or gallery access) when downloading a loan app.
'Pause, Check, and Think Again'
While the list of devastating stories due to Instant Loan Apps is long, it doesn't mean all apps are bad. When borrowing from apps that provide quick money, take a moment to pause, thoroughly check, and reconsider. Such prudence today can save you from significant issues tomorrow.
Yashoraj Tyagi shares that with understanding and reputable sources, instant loans can help in emergencies and, if managed properly, can even assist in building credit history. The essential point is to carefully read the loan's terms, borrow only what you can comfortably repay, and avoid borrowing from multiple apps simultaneously.
