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Loan apps or simply digital lenders have been providing fast loans to smartphone users in emerging markets especially Kenya.
Its something that changed the way borrowing is done - fast and inclusive - as opposed to the way people used to accessing 'slow' loans from the conventional lenders.
There is a long list of benefits the digital lenders came with to the market. Easy access to funds, inclusivity, just to mention but a few.
Not everything seemed well though. There are somethings that are not beneficial caused by the entry of loan apps in the market. For the purpose of this article, I'll share 5 things loan apps caused and are not okay.
5 times digital lenders failed customers
1. Very High Interest Rates
Most of the loan apps charge an interest rate above 15 percent which is far much higher compared to banks. Sometimes with the high interest rate borrowers are forced to repay more than three times the amount borrowed.2. Debt Overburdening
The apps worked independently each attracting customers forgetting that the same customers are taking loans from other loan app. This way most borrowers failed to repay loan and were blacklisted with the CRB due to excess loans.3. Short Repayment Durations
There's nothing much you can do with a 7 day loan. Some loan apps had as short repayment duration as a single day!4. Smaller Loan Amounts
Most of the loan apps were providing very small loan amounts. There's nothing much a borrower can do with $1 (KSh 100).5. Communication Problems
There was and to some loan apps ,there's still difficulty in reaching out to the customer care help desk. Digital lenders hide their numbers and even their premises locations. Customers struggle much to solve even the slightest mistakes and can land one in CRB due to delayed or no action from the side of the lender.Bonus; Unnecessary Fees
This does not come from most of the legit loan apps but it something some loan apps practice. You'll find that loan apps charge unnecessary registration fees, appraisal fees
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