In today’s time, more and more people are turning to instant loans to meet their immediate financial needs.  

Whether you need money during an emergency or to buy a new bike, loan apps have made credit easily accessible. 

But this popularity of instant loan apps has also increased fraudulent lenders, making loan scams a rising concern for the borrowers.  

To avoid falling into a loan scam, you can use these 6 simple steps identify a fake loan app:   

1. It does not follow the lending guidelines of RBI 

It is mandatory for any kind of lending partner to meet the regulatory requirements of the RBI. If they don’t then it’s an indicator of a fake loan app.  

You can validate its compliance with the lending guidelines by going through their website and checking mentions of lending partners which could be banks or NBFCs.   

2. It doesn’t have a website, or has a fake website 

Absence of a website could be a sign of a fake loan app because a fraudulent lender will want to keep their identity anonymous. This could be because they would want to avoid giving detailed information of their company. 

While many such apps don’t have a website, there are also a few lenders who create a fake or an unsecured website to show authenticity. You can easily differentiate between a secured and unsecured website by paying a close attention to the URL.  

A secure website will have ‘https’ while an unsecured website will have ‘http’ in their URL.  If you come across any loan app that doesn’t have a website or has one with such a URL, it is best to avoid them. 

3. It doesn’t provide a loan agreement 

A legitimate loan app will always provide a loan agreement that contains all the necessary information you should know about.  

It would contain information like the processing fees, interest charges, and guidelines on penalties and default.  

If you have come across a lending partner that fails to provide you any kind of loan agreement, then you should demand for one.  

If they’re still not providing one, then you should avoid taking a loan from them as it probably is a fake app.  

4. It asks for an advance payment to process your loan  

If your lender is telling you that you’re approved for a personal loan, but you’re supposed to pay a small “advance-fee” to access it, then it’s a big red flag.  

Authentic lenders might charge a processing fee but will never ask for an advance fee to approve your loan application.  

Borrow money only from such lenders. Avoid making any kind of upfront payments for loan approval.  

5. It provides loans without asking for any documentation  

As per the RBI guidelines it is mandatory for any lending partner to take your personal information like PAN, Aadhaar card, and income details to determine your credit worthiness and evaluate your loan offer.  

If you are getting a loan without the submission of any kind of document or personal information, then it is best to avoid such lenders. 

6. It has a lot of negative reviews online 

Social media has made it easy to spot fake loan applications. Going through reviews on platforms like Play Store, YouTube, Facebook, etc can give you more information about the authenticity of the loan app.  

A fake loan app will have a lot more negative feedbacks and warnings that highlight the lack of authenticity as compared to a real loan app.  

Conclusion 

There are multiple warning signs that can help you identify a fake loan app.   

By familiarizing yourself with them, you can protect yourself from falling prey to a loan scam or any kind of fraudulent financial activity.  

If you want to borrow money from an authentic loan app, you can consider Zype which is a genuine Fintech platform.