YOUR QUERIES: LOANS: Planning to take a loan from app-based lender? Tread with caution

The threat to sensitive data should be kept in mind while going for such app-based loans. Look for large, known players in this market who have credibility and longer lending history.

The HFC’s floating rate criteria is not covered under the repo rate linked loans.
The HFC’s floating rate criteria is not covered under the repo rate linked loans.

By Chaitali Dutta

What are the factors to be kept in mind when taking a loan from an app-based lender?
—Vikas Malhotra
In India, almost 50% of the quick loan apps were found to be illegal by a working group study initiated by RBI earlier this year. It was found that there is not enough transparency on the process followed for the sanction of loans. In several cases, the borrower’s documents and sensitive information collected at the time of sanction were mis-utilised by the company. In case the borrower is duped or harassed by the loan sanction-ing company, he has to approach the consumer forum for remediation rather than, say, a Banking Ombudsman, where the rules and governance are set out and have to be followed by banks.

From the consumer’s perspective, the ease of access to funds, the quick turnaround time and application done without stepping out of the house make this route a very attractive proposition. On the flip side, there is a tendency to sink into a debt trap and borrow more than what can be serviced monthly. The threat to sensitive data should be kept in mind while going for such app-based loans. Look for large, known players in this market who have credibility and longer lending history.

I have availed a loan on a floating rate basis. Why does the HFC insist I pay a fee each time to lower the interest rate?
—Anju Singh
These caveats are mentioned in the arrangement letter and the loan is governed by terms and conditions agreed upon. The HFC’s floating rate criteria is not covered under the repo rate linked loans. The latter is transparent. Try to transfer the loan to such a bank.

I took a loan of Rs 16 lakh from HDFC in March 2020. I made a part payment of Rs 4 lakh in February 2021 and applied for a PMAY subsidy in the same month. Can I get the subsidy now? And if I again prepay Rs 2 lakh, will I be eligible for that subsidy?
—Zeenath Jahan
Yes, it is possible for you to apply for a PMAY subsidy now if you fall under LIG/EWS. However, after your subsidy application, if you repay any amount, then the pro-rata amount of the subsidy has to be given back by you.

The writer is founder,
AZUKE Personal Finance Advisory (www.azukefinance.com).
Send your queries to fepersonalfinance@expressindia.com

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