Why Are Loan Apps So Popular and What Are They?
Loan apps are mobile applications that give short-term loans. Usually, the loans are without collateral, paperwork, or physical verification. They are popular because
- They offer lenders fast approval.
- They do not require any bank account history.
- Easy to access just by using a smartphone
- Documentation is minimal.
In countries like Ghana, Nigeria, Kenya, and India, due to rising rates of unemployment and limited access to traditional banking, these loan apps have become enticing, especially to students, informal workers, and people who own small businesses.
Why You Should Avoid Digital Loan Apps: The Truth About Harassment and Scams
In the last few years, the convenience of getting a loan in five minutes with "no collateral" has lured millions of people into a digital trap. I remember the first time I saw one of these ads; it promised an instant GH₵ 3,000 (about $261.48) to cover an emergency bill. It felt like a lifesaver. But before we get into the details of what truly goes on.
Here is an Introduction: A Lesson I Learned the Hard Way
It was a few years ago when a close friend of mine needed money urgently to take care of a family emergency. Honestly, getting money from the bank was hard; friends to borrow from were another headache for him. Having no other option, he resorted to an online loan app that promised an instant loan. It was instant, just needed about five minutes to complete, and no collateral. What happened next shocked all of us, actually. He was allowed to borrow a loan amount of GH₵ 150 (about $13.07), and he planned to repay it in two weeks.
Immediately after he requested the loan, about 40% of the amount he borrowed was deducted from the amount he requested. That was a big blow. If you think this is not true, let me give you proof of reviews on some loan apps on Google Play.
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| Reviews of apps that scam people |
The Scary Things That Happen After Taking Loan Apps
After my friend had suffered the pain of being deducted that much from the initially applied loan, the day for repayment was almost due. These app owners do not give you ample time to repay their loan; they give you just 7 days. Three days to the due date for repayment, the calls started. The messages, the threats. It was so embarrassing. The loan apps sent messages to people in his contact list, accusing him of being a fraudster. This is the reality of borrowing money online and from loan apps.
- They promise you money and take a higher amount, about 40% - 60% from what you requested.
- They sent you threatening messages and to your relatives as well.
- They try to shame you
- They benefit from you more than you will benefit from them.
- They operate outside the law, harvest your information, and steal your day.
The Anatomy of a Predatory Loan App
Most people have the mindset that if an app is on the Google Play Store or Apple Store, then it means the app must be legitimate. Yes, true, but unfortunately, predatory lenders often pass security checks by using "shell" companies.
What These Predatory Lenders Secretly Do.
1. Harvesting of Data and Excessive Permissions.
When you install these apps, they request that you give them access to your contacts, your SMS logs, your gallery, and even your GPS Location. Truth is, any legitimate bank will rarely need your entire contact list.
The Trap
Once you grant the companies running those apps permission to your data, they scrape every phone number and photo on your device. This data becomes what they will use to blackmail you if you are even a few hours late on payment.
2. The Hidden Interest Rates.
Predatory apps often advertise low interest rates (e.g., "0.1% per day") but hide massive processing fees. It is very painful, and you shouldn't fall prey to these schemes after reading this article. The reality is that you might borrow ₦20,000 (equivalent in your local currency) but only receive ₦13,000 after "service fees" are deducted. The extortion does not even end there; you are expected to repay the full ₦20,000 plus an unbelievable interest in just seven days.
3. The Harassment, Threat, and Public Shaming
One of the most disturbing and embarrassing practices of loan apps is harassment. Victims who have experienced this report:
- Daily phone calls (sometimes 20 to 50 per day), especially if you are not answering
- Insulting and threatening messages.
- They falsely accuse you of fraud or theft.
- They send messages to your family, friends, co-workers, and even church members.
- The worst, they can make fake posters of you using your photos and label you as a criminal.
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| Messages from some loan app agents |
The Scheme Loan App Companies Use On Play Store and Apple Store
To have credibility and rank, as well as confuse a lot of people on the Google Play Store and Apple Store, they use bots and pay people or review companies to rate their apps 5 stars with nice and beautiful comments. All of these are scams just to convince you into believing they are better. You go ahead to borrow, and that is when you come to regret your decision to have borrowed.
Real people who have had a first-hand experience with these scams write reviews, and mostly award these apps 1 or 2 stars, including the place they had. To locate these reviews, do this.
- When you click on a loan app to download it, do not read the first set of reviews. They are mostly good ones with five stars. Scroll down until you see more reviews and click on it.
- Under more reviews, look for critical and click that, you will see reviews of real people and not those of bots.
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| How to know a loan app is fake. |
What You Need to Know
Financial Authorities around the world have warned against online loan apps.
- The Bank of Ghana has warned against unlicensed digital lenders.
- The Reserve Bank of India (RBI) also banned a lot of loan apps in 2022
- Google itself has removed hundreds of predatory loan apps from the Play Store.
And according to the World Bank, unregulated digital lending increases the vulnerability of finance rather than inclusion when consumer protection is weak.
How to Protect Yourself If You Have Already Used a Loan App
If you are already affected
- Do not panic
- Revoke all app permissions immediately
- If you are being harassed, then it is best to go for legal advice
- Report the app to the Google Play Store and your country's cybercrime unit
How You Can Spot a Predatory Lender
A few things about predatory lenders can help you spot them immediately,
- They have short repayment periods.
- They do not have any physical office. You can search for verifiable physical addresses.
- Their terms and conditions are vague
- They do not have any regulatory approval.
Better Alternatives to Loan Apps
If you need a loan, there are still better alternatives to these loan apps that only take advantage of your situation to scam and harass you. These alternatives include
- Credit Unions
- Take a salary advance from your boss if possible
- Borrow from traditional banks
- Ask a friend, a family member, your pastor, or someone in your community or around you who will help willingly.
Before this article comes to a close
If you have or know someone who has had an experience with these loan apps. Share your story in the comment section below to help warn others. Let us create a platform that stays informed and safe, a platform that creates awareness to save people from falling prey to online scams.
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Master the Art of Handling Money: A Practical Guide to Better Finances
