Fintech, a finance and technology rack, has revolutionized the lending and payments landscape in recent years in India. The industry has experienced phenomenal growth in terms of lending businesses, which has made it easier for borrowers to access credit. Full of opportunities, these loan companies have also caught the attention of investors and fraudsters.
While digital lending has the potential to make access to financial products fair, efficient, and far more inclusive than traditional banks, customers should be aware of the downside risks associated with such initiatives. A basic understanding of digital loans and the lending process will help borrowers protect themselves from fraud.
Here are some things a lender should know before relying on fintechs for loans:
All lenders are concerned about the borrower’s credit report and check their payment history details. Fintech lenders use artificial intelligence models to check a borrower’s credit rating. The process can be quick, but is always done to find out if the borrower is conscientious about repaying a loan. Loan scam operators are more likely to fail to verify borrower details.
Fraudulent lenders focus on high risk debtors who are desperate for quick loans.
Fraudulent lenders usually put pressure on borrowers with delays in applying for a loan.
Borrowers should always avoid scanning a barcode to receive money from a lender.
Bad lenders do not disclose all of the loan terms, including repayment amount, interest, late fees, and term.
All lenders share a loan agreement with borrowers that includes all of the detailed terms and conditions. If a lender fails to provide such a document, the borrower should not take out the loan.
Borrowers should conduct due diligence on potential lenders before applying for a loan. Genuine lenders have websites which should be verified before downloading an app.
If the borrower takes out loans through an application, it is always advisable to carefully review the loan application. They should also read the app’s privacy policy which is posted on the app stores.
Fraudulent loan operators sometimes avoid giving out the physical address of the business to ensure that they are not easily located.
