Risk of data theft and harassment via personal loan apps:Be cautious if apps ask for access to your contacts or location; what to watch out for

Taking an online personal loan has become extremely easy. By uploading documents such as PAN, Aadhaar, and bank statements, money can be credited to your account within minutes. However, this convenience comes with serious risks. While applying for a loan, users often share not just income details but also unknowingly grant apps access to their identity, spending patterns, location, and even personal contacts—putting their privacy at risk. Loan Apps as Middlemen Increase Data Theft Risk Many borrowers fail to check who they are applying to. There is a major difference between a reputed bank or RBI-registered NBFC and an unverified loan app. Banks and NBFCs operate under strict RBI regulations and regular audits. In contrast, many instant loan apps function merely as intermediaries. Their primary role is to collect user data and pass it on to multiple partners. As data changes hands several times, the risk of misuse and privacy breaches increases significantly. Unnecessary Access to Contacts and Gallery Is a Red Flag Several loan apps demand access to contacts, call logs, photos, and location—none of which are required to assess creditworthiness. In past cases, borrowers who failed to repay on time reported that these apps harassed their friends and relatives using contact data. Although regulators have tightened rules, such practices have not stopped entirely. Any app asking for unnecessary permissions should be treated with caution. Data Often Retained Even After Loan Rejection Many users assume that if their loan is rejected, their data is deleted—but this is rarely true. Personal documents and IDs often remain stored on company servers for years. Privacy policies usually allow data sharing with partners or vendors for “business” or “analysis” purposes. This explains why users often start receiving spam calls and messages long after applying for a loan. Don’t Click ‘Agree’ Without Reading Terms In urgent financial situations, people tend to accept terms and conditions without reading them. Offers like “instant approval” or “no questions asked” may look attractive, but they often come at the cost of personal data security. In the digital lending space, speed can compromise privacy. What to Do If Your Data Is Misused If a company threatens you or contacts your relatives: Such actions are not just unethical—they are illegal.