Digital lending startups have faced the crisis as borrowers fail to follow coercive collection tactics by some app-based lenders. The industry representatives have stated that most of such entities have a lack of regulation. At the same time, they admit that some course amendments may be required for startups themselves as well.
Digital lending startups are fighting with the news related to coercive collection tactics used by instant cash loans companies. While most of these companies have become unregulated and fraudulent entities, the struggling startup sector now has to deal with negative attention from the banking regulators and the authorities.
Payday lenders have become involved in the conflict with the national regulators. Many of them have been closed in the United States. You can only guess how positive this tendency is.
Good and Bad Lenders
The use of fraudulent apps makes it difficult to differentiate quality content from a fraudulent one. There are multiple small signs to keep an eye out for before taking instant cash loans online: bad credit personal loans guaranteed approval no credit check. For example, you can find a checklist with the telltale signs of scams at Instantcashtime.com. This is an adequate and fair approach to lending services.
The industry body and its members are intended to create customer awareness campaigns to prevent borrowers from getting into financial traps. Meanwhile, financial institutions prefer to work with loan sourcing sites which provide attractive interest rates and work in accordance with the guidelines determined by the RBI. Thus, potential borrowers should look for loan options from such entities rather than instant cash apps found on the Google Play Store.
High Interest Rates
Unscrupulous lending companies have been taking over the grey economy for years. Many of them have moved from physical to online presence by creating simple apps to lure customers. With COVID-19 disturbances, the income of people decreased considerably. So, online lenders like Instant Сash Advance have turned into a popular solution to financial problems.
As you can guess, not all companies are customer-oriented. Knowing the challenging situations of their customers, they charge huge interest rates without signing up any documentation. When borrowers can’t cover their debt on time, they get threatened, abused, and harassed by collectors.
COVID and the Cash Crunch
Blue-collar workers and temporary workers are still considered to be the most popular victims of unreliable lending companies. They usually take small value instant cash loans towards the end of the month. Due to a stable income, they manage to close their debt by the requested deadline.
While unscrupulous money lenders have always been there, their activities became even more drastic during the pandemic. Many people faced massive cash flow issues during the lockdown as their income was almost down to zero. At a time when banks and large NBFCs stopped or slowed down their loan agreements, some direct lenders tried to fill the void with personal loans given out with zero KYC and almost instantly.
At an industry level, some awareness programs need to be developed to protect borrowers from scammers. Through a press note, the industry representatives have mentioned some checks which borrowers can undertake before borrowing cash online. Once they are done with an online examination, they can focus on digital repayment mechanisms. Eventually, borrowers will be able to make sure that all payments are accounted for.