Instant personal loans are simple to avail and fast to utilise. You can apply online, provide a few documents, and receive money in your account within hours. It seems easy and useful, particularly in case of emergencies. But before you press “apply now,” you must know the risks involved.
Let’s discuss the usual risks and how you can avoid trouble.
- High Interest Rates
Certain mobile loan apps or websites provide instant personal loan online with minimal checking. But they have extremely high interest. You can take a loan of ₹10,000 and have to pay much more in less time.
The rates of interest on such loans can be extremely high compared to what banks or reliable NBFCS charge. Always see the total amount payable before you accept the loan.
- Secret Charges
A few lenders display a low rate of interest and then include a host of other charges. They might be processing fees, account handling charges, or repayment before time. You might miss these unless you go through the terms thoroughly.
These additional charges may add up to your final cost without your knowledge in the initial stages.
- Impersonal Loan Apps
There are numerous cloned apps on the web. They appear genuine but are not listed with RBI. Once you’ve applied, they will request more money in the name of insurance or processing. Some even vanish after collecting your details.
Always verify whether the loan app is RBI-approved with positive ratings and reviews.
- Misuse of Data and Harassment
Most loan apps request permission to view your phone contacts, gallery, and messages. If the lender is illegitimate, they can use your personal information for misuse.
There have been numerous instances in India where the borrowers have been harassed. Some illegitimate lenders sent messages to family members or friends to shame the borrower into making a payment.
- Extremely Short Repayment Period
Certain instant loans must be repaid within 7 to 15 days. If you are unable to repay, they might provide another loan to settle the first loan. This can create a loan cycle where you keep borrowing repeatedly, only to settle the previous loan.
This can lead to stress and financial pressure.
- Effect on Credit Score
If you’re late in repayment of your loan, your credit score decreases. A bad credit score prevents you from obtaining further loans or credit cards from credible banks. Never borrow more than you can return on time.
- Poor Customer Support
Most instant personal loan app lack adequate customer support. In case you encounter a problem, no one will assist you. You might be stuck with incorrect charges or loan information. This may be frustrating and could cause additional stress.
Online instant personal loans are helpful, but they are risky too. You have to be cautious while selecting a lender. Always research the background of the lender, read everything thoroughly, and never provide too much personal information.
If you are not certain about the loan, consult someone close to you. Think before lending. A couple of minutes of verification can rescue you from huge trouble later.