At present, borrowing money may no longer be a difficult case. If an only investment can be done online, so too in terms of borrowing money. You must have heard about online money loans, which are increasingly varied.
Call it to peer (P2P) lending, fintech lenders, or even online money lending features provided by banks.
However, the ease of borrowing money does not mean there is no risk. Do not be mistaken for borrowing money online then you can get out of hand when unable to pay. Borrowing money online also has the same risk or maybe more dangerous than if you borrowed money elsewhere.
Learning from the case with the victim you should be more aware when you are going to borrow money, especially if you are borrowing money online. Get to know the risks like the seven below then choose the best way to borrow money when in a desperate condition.
High Loan Interest
Ever heard borrowing money online has lower interest rates than at a bank?
The reality is not always like that. It is not uncommon for loans to be very high with the promise that money can be disbursed in a short time.
For self-interest loans, for example in P2P lending, it can range from 14% to 30%.
The rules regarding loan interest are indeed not strictly regulated.
The Financial Services Authority (FSA) does not regulate online loan interest limits. The interest rate arrangement is left to each online loan company.
Problems that often occur, many people are not aware of the amount of interest they have to pay.
Even though sometimes interest rates have been mentioned, because you are too panicked or other reasons, you forget this important information.
It could also be because the lure of money can be disbursed quickly, you are ignorant of the amount of interest.
The existence of unexpected costs
Do not think after the loan was successfully obtained, you only need to pay money and interest.
There are other costs that need to be taken into account. You name it, administrative costs will be deducted from the value of the loan. The amount is around 3% to 5% of the nominal amount borrowed.
Then, there are also fees or penalties when late paying or paying the money borrowed.
Not to mention, if the arrears have to be billed by the company, you have to be willing to pay the billing fees anyway.
With so many unexpected costs to pay, not to mention interest and other risks, you should not easily decide to take out an online loan.
Think carefully about the risks that must be faced, lest you get stuck in debt online and can’t escape.
Non-transparent Debt Payment Report
Before taking out a loan, you must ensure the amount of interest and other fees that must be paid.
Do your own calculations and check carefully every payment report issued by an online loan company.
It is not impossible, in some cases, payment reports are not done transparently, especially for illegal loan companies.
Do not be lazy to ask questions and recalculate the total payments made to avoid greater financial losses.
Short Repayment Deadline
The repayment period for online loans is fairly short, which is a maximum of 12 months.
With high interest and a short repayment period, of course, it will not be easy for most people.
Therefore, before experiencing difficulties due to debt collection, it is better to take into account whether you are able to pay debts and interest in a short period of time.
Also, note that online loans are not used as capital or to finance any business that has medium and long term profit potential.
If so, you will have difficulty repaying and paying off the loan.
Personal Data Can Be Leaked
Similarly, when downloading digital banking applications or other applications, downloading an online loan application also requires the approval of access requests for personal data, such as a photo gallery, location, contact telephone number, or camera.
Without agreeing to a number of access, the application cannot be used or some features cannot be used optimally.
This might seem simple, but it will have a big impact when it comes to online money lending.
Because giving consent, that means online loan companies can access your personal data.
It is not impossible that this data will be used by the company if something happens, such as late payment.
The company may come to the residence address or contact important numbers in the telephone contact list to collect the debt.
Not only embarrassed but also the discomfort you will surely feel. Not to mention the burden of debt and interest that continues to grow. This is the worst bit of a shadow if you borrow money online and can’t pay it on time.