Taking a personal loan is the only viable option that you can opt for when you don't have any collateral to pay when you need money the most. A personal loan is an unsecured loan provided by banks and other financial institutions to borrowers to meet your financial needs.

The best way to get a personal loan is to approach a bank. Failing this, the next best alternative is to seek the help of a fintech. There are some financial technology firms that provide personal loans to borrowers like KreditBee, Lendingkart, Paytm, Money Tap and Groww. Before you start borrowing money from fintech platforms, be aware of three important factors.

3 Mistakes to Avoid When Borrowing Money on FinTech Platforms:

I. Approaching platform not registered with RBI: The banking regulator has uploaded a list of registered non-banking financial corporations. You can access the list here. Be careful to seek a personal loan only from a registered NBFC or a fintech platform partnered with a registered NBFC.

II. Don't get carried away by downloads : It is essential to have the necessary regulatory approvals. Therefore, before taking a personal loan from a fintech platform, ensure that the platform is registered and authorized to engage in lending activities. Some individuals fall into the trap of the fintech platform after seeing that there are many downloads on the Google Play Store.

In two years, 4,700 illegal loan apps were removed from Google Play Store. In September 2023, Google removed a dozen fake loan apps with over 100,000 downloads and 14 with over 50,000 downloads. Every year, many complaints are filed against these kinds of apps. Data shared by the Finance Ministry in the Lok Sabha reveals that 1,062 complaints were filed against these fake loan apps in FY 2023 alone.

III. Customer Care System: It is important to note that a fintech platform should have a well-functioning customer care system. Even though loans can be accessed digitally through an app, if you have a problem - you need to have someone to talk to. Without a customer care department it is almost impossible to resolve your complaints through the app.

So, always make sure to approach a fintech platform that is reliable, has a registered office in a metro city, a functional customer care number and most importantly - a good reputation in the industry.