Borrowing amongst young people has been linked to economic shocks and the lack of employment opportunities amongst the youth. These increased unemployment and rising debts have significantly contributed to mental health, such as depression, suicide, and substance abuse among the youth.
Young people are struggling with huge debt, and loan apps are not making it any easier for them. In fact, these apps have done more harm than good.
In most cases, the industry is unregulated, making borrowing money easy for young people. Every young person now has smartphones that enable them to borrow cash from as little as 500 to 100,000 without a sweat. These processes mainly do not require long protocols to access the loans. No documentation is needed; no paperwork nor signatures are required to process these loans. This has proven to be tempting for anyone needing money, and many young people are running to this app in dire need. Most young people have taken advantage of this because they want instant gratification. However, this easy access comes with risks that borrowers must be aware of.
It has become a cycle of money lending and borrowing from one app to another, with some people having more than one mobile lending app on their phones. This has, with time, gotten them into an unhealthy cycle of borrowing and never having money to pay back.
Those who get these loans get them without even having an idea of how to repay the money. It’s also unfortunate that most youths don’t have a clear plan of using this money once borrowed, and they end up spending this money on sustaining their luxurious lifestyle and not on investments, while others use it on gambling. This has then caused many borrowers to struggle to pay their loans. Defaulters of the loans then end up being listed in the bureau, which means they cannot access loans now and, in the future, until they are cleared from the listing bureau. However, a few that have a plan have used their proceeds from the loans to venture into businesses and, in return, can pay up their loans.
There have also been incidences of fraudsters in mobile banking who have established a way of manipulating borrowers. Their processes are stress-free, but once you get these loans and default your payments, they apply unethical pressure tactics to ensure you pay back the money. Some even threaten the loved ones from the contact list of their borrowers. This pressure is so much that it is costing young people’s lives as it has been reported that they commit suicide over bank loans they have been unable to pay.
There are ways young people can be safe to avoid these consequences.
Here is How to Evade the Traps of Untrusted Loan Apps
- Be aware of the eligible loan apps present today.
- Research and verify online reviews from customers who have used different loan apps.
- Check and ensure reviews on trustworthy lenders.
- Make sure lenders have an RBI or non-banking financial company license.
- Review the app requirements regularly.
Finally, I know sometimes the month is long gone, and you may be surviving on the bare minimum, and reaching out for a loan from this mobile lending app may help you sustain yourself before the next pay.
Keep in mind these five things before borrowing
Interest rates of these loans
Be careful with loans that strike a high-interest rate because they could leave you in a more massive debt than you had expected.
There are also loan apps that impose heavy penalties daily or even weekly if you fail to repay. Watch out for this to avoid having a huger debt than you are already supposed to pay.
Access to personal information.
Some loan apps may require you to give too much personal information, which may be risky because of point three.
Extortion cases
Due to too much personal information, loan app operators have resorted to extorting and frauding customers by using stolen data from previous borrowers, asking the same borrowers to pay for the same loans that have long been settled.
Verify the money lending mobile apps before making any loan applications with them.
