Who doesn’t need money? There are events in our life that often require us to spend money in various sectors. Not all the time we spend money on needs, we also spend money on unnecessary things in many cases. While it is true that we spend in different ways in our personal and social life, it is also true that not everyone has money in their pocket all the time; and that is why many people take loans to meet their financial needs temporarily. Digital Loan System is the latest medium for receiving and paying loans. The processing of taking and disbursing digital loans is done entirely digitally using mobile apps or web browsers.
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Definition of Digital Loan
When a financial organization or a bank provides loans to their customers by using financial technology that processes transactions and related tasks entirely digitally through a web browser or mobile application is called a digital loan.
It should be noted that the English term ‘Financial Technology’ is called ‘Fintech’ in short.
What is a Digital Loan App?
A digital loan app is a type of mobile or computer application using which a customer can easily apply for a loan from a bank or a lending institution within a short period of time and get the loan amount with the instant loan approval.
Digital loan apps can be used to purchase products or services from certain partners of lending banks or financial organizations. Loans issued through digital loan apps have relatively higher interest or bank profit rates than general loans.
Advantages of Digital Loan App
- Loan application, loan approval, and loan repayment can be done without physically attending any branch of the bank or lending financial institution.
- It is possible to get instant approval by applying for a loan within a short period of time.
- Transactions are completed in a completely digital process.
- Products or services can be purchased hassle-free from partner institutions of specific lending organizations or banks.
Disadvantages of Digital Loan App
- Through the digital loan app, issuers charge a comparatively higher amount of interest or profit against the loan.
- If the customers of the loans taken through the digital loan app fail to repay the loan as per the specified conditions and time, they have to pay a higher penalty.
- Generally, products or services cannot be purchased from other than specific partners of the banks or financial organizations.
- Apart from banks, there are many institutions around the world that provide loans through digital loan apps, most of which are not officially registered, thus the people who take loans are at risk of falling into the trap of frauds.
- Unregistered digital loan app companies have been accused of stealing personal photos, contact numbers, and other information.
- Unauthorized digital loan apps are even accused of blackmailing consumers.
Is Digital Loan App safe?
Digital loan apps are undoubtedly a better system to adopt in today’s digital world. But a customer must be careful in selecting lending financial organizations. A large number of digital financial organizations have sprung up in many countries around the world, most of which are unregistered and unauthorized. It is unsafe to take loans through loan apps from institutions that are not registered. However, it is not guaranteed that a loan from a registered financial technology organization will be safe through the digital loan app. The customer may be at risk due to cyber attacks or hacking. Many people from countries like India, the USA, and Australia have been cheated with loans through digital loan apps.
However, if someone has to take a loan through the digital loan app, then he should take it from a registered commercial bank. If a bank offers a loan through the digital loan app then you can accept it, it is safe and secure.
Remember, no matter how good a bank your account with, you can be a victim of a cyber attack at any time. However, financial transactions should not be done without government or central bank-registered banks or subsidiaries of registered banks.
It is safe to take a loan through the digital loan app if it is offered by a registered bank. Before applying for a digital loan, make sure the financial technology organization is authorized by the central bank of the country.