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Planning To Borrow From Emergency Loan App? Here Are Key Things To Keep In Mind

Expert opined against borrowing from emergency loan apps due to data theft risk and harassment.

A rainy day can dawn upon anyone unexpectedly. In case of an emergency, an individual may not be able to have enough funds to have them prepare for a situation like a medical emergency, or a roof falling apart that might need immediate attention. People generally look for loans to meet the demands of these emergencies but they need to be careful.

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As per Reserve Bank of India (RBI) India recorded around 13,530 loan fraud cases in India during the financial year 2023. The total value of these frauds was around Rs 302 billion ($3.8 billion), during the same period. Representing a decline of 49 per cent from the previous year. Additionally, in FY2024 the RBI recorded bank frauds amounting to Rs 139.3 billion.

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In case of emergencies, one may need to avail of loans from the emergency loan app. However, this also opens the gate for shady apps, that may be fake or illegitimate.

What Are Emergency Loan Apps?

Emergency loan apps are online apps that provide customers with quick and easy access to personal loans when they need them urgently. You have to do minimal paperwork with the whole process being digital.

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Emergency loan apps are online apps that offer consumers fast and simple access to personal loans at the time of need. This kind of app usually requires minimum paperwork with every process being digital.

What Differentiates Emergency Loan Apps From Regular Borrowing?

Convenience: Emergency apps are known for the convenience they provide. A borrower may not have to do any additional paperwork, it is usually done at one app online.

No Physical Paperwork: Being present online, the paperwork is done online without any physical visit or any hard copy required.

Fast Disbursal: Emergency loan apps usually like their name suggests approve and credit loans instantly.

User-Intuitive: Emergency loan apps are made to have a user-friendly interface.

Things To Be Wary Of While Borrowing From Emergency Loan App

While emergency loan apps can become a boon to an individual in need of emergency. It can also open gates for fraud, scams and harassment.

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B. Srinivasan, CFP, Director, SHREE SIDVIN, while speaking with Outlook Money warned against emergency loan apps and suggested that one should not borrow from such apps until absolutely necessary.

Srinivasan cautioned against exorbitant interest rates charged by these borrowing apps.

Additionally, he pointed out the data theft threat by these loan apps. He also mentioned some of the cases he had observed among his clients being harassed by loan recovery agents despite repaying the full amount owed.

Here are things to keep in mind while borrowing from emergency loan apps:

Interest Rates: Emergency loan apps often ask for higher interest rates. It is a good practice to check before falling into a debt trap without being fully informed.

Check the Terms And Conditions: Always go through the lending document thoroughly before proceeding with the loans. The key is in the fine print.

Concealed Fees: Go through the hidden charges applied by the emergency loan apps.

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Credibility: Ensure that the app that you are uploading all your data on is trustworthy and has a clean record.

Share OTP Carefully: They may ask for one-time passwords (OTP) during the processing of your e-KYC. Ensure that these OTPs are not leading to access to any transaction from your bank account.

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