Unveiling the Dangers of Illegal Online Lending Apps in the Philippines (2024)

In 2024, the landscape of online lending in the Philippines is fraught with peril as illegal online lending apps continue to prey on unsuspecting borrowers. CashExpressPH will sheds light on the dire situation, offering valuable insights into the dangers these apps pose and the measures borrowers can take to protect themselves.

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Top 10 Fast Online Loans in Philippines – A Valid ID is All You Need Updated in May 2024 

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Summary of Illegal Online Lending Apps in the Philippines

The Philippines is witnessing a surge in the proliferation of illegal online lending apps in 2023, posing a grave threat to the financial security and well-being of unsuspecting borrowers. These apps, operating on the fringes of legality, have emerged as a scourge on the nation’s financial landscape, enticing individuals with promises of quick cash while ensnaring them in a web of debt, harassment, and financial distress.

  • Interest Rates: The hallmark of these illicit lending apps is their insidious use of sky-high interest rates that far exceed legal limits. Borrowers often find themselves ensnared in loans bearing interest rates ranging from an astounding 0.2% to a staggering 1% per day, a financial abyss from which escape is arduous.
  • Eligibility: Lured by the ease of application and minimal eligibility criteria, individuals aged 18 to 70 fall victim to these predatory apps. While the allure of rapid approval through gcash integration may seem tempting, the consequences are dire.
  • Pros: These illegal lenders tout fast approval processes as one of their key attractions. With minimal documentation required, they promise a hassle-free path to obtaining quick cash, exploiting the urgency that many borrowers face.
  • Cons: The dark side of these apps becomes evident when borrowers find themselves subjected to relentless debt collectors’ harassment. The aggressive tactics employed by these lenders are nothing short of terrorizing, with constant calls, threatening text messages, and even visits to borrowers’ homes, creating a living nightmare.
  • Effectiveness: When evaluating the effectiveness of these illegal online lending apps, the verdict is unequivocal – they perform abysmally. The exorbitant interest rates and dubious practices ensure that borrowers quickly find themselves drowning in debt, rendering these apps ineffective at providing genuine financial assistance.
  • Bad Debt: Perhaps the most alarming aspect of these illegal lenders is their willingness to allow borrowers to accumulate bad debt without remorse. While borrowers struggle to make ends meet, these unscrupulous apps profit from the misfortune of others.

What are Illegal Online Lending Apps?

Illegal online lending apps, as the term implies, operate without the requisite authorization from financial regulatory bodies, disregarding borrower protection laws and ethical lending practices. These apps often exploit borrowers through exorbitant interest rates, concealed fees, and misuse of personal data, putting unsuspecting individuals at risk.

Harmful Effects of the Illegal Loan Apps List Philippines

The repercussions of dealing with illegal loan apps are far-reaching and devastating, including:

  • High Interest Rates and Fees: These apps levy exorbitant charges, trapping borrowers in crippling debt cycles. The compounding effect of daily interest rates often leads borrowers to pay back multiple times the borrowed amount, perpetuating a cycle of financial distress.
  • Debt Collectors Harassment: Employing aggressive tactics, they hound borrowers incessantly, causing immense stress and psychological trauma. Borrowers are often subjected to relentless phone calls at all hours, threatening text messages, and even personal visits, which can lead to an erosion of mental well-being.
  • Data Privacy Violations: The unauthorized collection of personal data is rampant among these illegal loan apps. Borrowers’ sensitive information, including contact details, financial records, and even scanned identification documents, is harvested without consent. This data is often misused, leading to identity theft, blackmail, and other criminal activities.
  • Legal Risks: Borrowing from illegal loan apps is not just financially detrimental; it’s also illegal in the Philippines. Borrowers who default on loans from these unregulated lenders may find themselves subject to criminal charges and legal penalties, compounding their already dire circumstances.

Illegal Online Lending Apps Philippines Interest Rates

These unscrupulous apps routinely flaunt legal limits. While the Philippines permits a maximum nominal interest rate of 6% per month (0.2% per day) for unsecured loans, these rogue apps have been known to charge as much as 30% per month (1% per day). This results in borrowers paying astronomical amounts in interest, often far exceeding the principal loan amount.

Loan App Interest Rate
CashWill 0.5% per day
PesoBee 0.5% per day
RushLoan 0.5% per day
SkyMart 0.5% per day
SpendCash 0.5% per day
Tapa 0.5% per day
WithU 0.5% per day
Cash8 0.6% per day
JuanHand 12%-20% per month
Lemon Loan 0.6%-0.8% per day

(Source: Refer to bsp.gov.ph reporting and research.)

These astronomical interest rates turn what might appear as a small loan into a financial burden that borrowers struggle to escape. For instance, a borrower taking out a modest P10,000 loan at an interest rate of 30% per month would find themselves burdened with P3,000 in interest for just the first month.

An Example of an Illegal Loan in the Philippines

Illegal money lending encompasses predatory lending practices that manipulate vulnerable borrowers with astronomical interest rates, hidden fees, and unfair terms. Loan sharks, another form of illegal lending, deploy violent and threatening tactics for debt collection, all while violating consumer protection laws.

How to Verify the Legitimacy of Loan Applications

To ensure the legality of loan apps, follow these steps:

  • Step #1: Verify registration with relevant authorities. Legitimate lenders are typically registered and licensed. You can verify this with your state’s attorney general or financial regulatory body.
  • Step #2: Investigate online reviews and customer experiences of the lender. This can provide insights into their legitimacy and credibility.
  • Step #3: Run a Google search to see if the company is registered with relevant financial regulatory bodies, such as the RBI. For mobile app loan companies, ensure they are authorized to operate by verifying their credentials.
  • Step #4: Confirm that the lender is registered in your state. You can contact your state attorney general or the state’s banking/financial services department for verification.

Adhering to these steps helps ensure that a loan application is legitimate and safeguards borrowers from potential scams.

Top 10 List of Illegal Online Lending Apps in the Philippines 2024

Here is a detailed list of the top 10 illegal online lending apps in the Philippines for 2024, each assessed for their pros, cons, and overall score:

#1. CashWill – Illegal online lending apps Philippines

CashWill is one of the notorious illegal online lending apps in the Philippines. It preys on people’s financial difficulties and charges exorbitant interest rates. People who borrow money often get stuck in a never-ending circle of debt.

  • Pros: Quick approval process, minimal documentation.
  • Cons: Exorbitant interest rates, hidden fees, aggressive debt collection.
  • Overall Score: 2/10

#2. PesoBee – Illegal instant loan app

PesoBee, posing as an illegal instant loan app, has managed to deceive many individuals seeking quick financial relief. However, it employs predatory lending practices, trapping borrowers in high-interest loans and hidden fees.

  • Pros: Fast loan disbursal, user-friendly interface.
  • Cons: High interest rates, unclear terms and conditions, unauthorized data sharing.
  • Overall Score: 3/10

#3. RushLoan – Payday loan illegal

Promising easy payday loan illegal, RushLoan lures desperate borrowers into its trap. The app’s astronomical interest rates and short repayment terms can push borrowers into even deeper financial distress.

  • Pros: Instant cash, no credit check.
  • Cons: Astronomical interest rates, short repayment windows, lack of transparency.
  • Overall Score: 1/10

#4. SkyMart – Illegal money lending

SkyMart is an illegal money lending which exploits the financial vulnerabilities of individuals by offering loans with hidden charges and exorbitant interest rates. Borrowers often struggle to repay and end up paying much more than they borrowed.

  • Pros: Easy accessibility, no collateral required.
  • Cons: Predatory lending practices, harassment of borrowers, misleading advertisements.
  • Overall Score: 2/10

#5. SpendCash – Loan shark illegal Philippines

SpendCash operates as a loan shark illegal, targeting desperate borrowers who have no other alternatives. It enforces extortionate interest rates and uses aggressive tactics to recover funds, perpetuating a cycle of debt.

  • Pros: Minimal eligibility criteria, quick application process.
  • Cons: Unreasonably high interest rates, aggressive recovery methods.
  • Overall Score: 2/10

#6. Tapa – Illegal loan sharks Philippines

Tapa represents one of the illegal loan sharks Philippines, employing intimidation tactics and resorting to harassment when borrowers fail to meet their demands. This illegal practice can have severe emotional and financial consequences.

  • Pros: None.
  • Cons: Unreasonably high interest rates, harassment, complete disregard for lending regulations.
  • Overall Score: 0.5/10

#7. WithU – Illegal lending practices in the Philippines

WithU’s illegal lending practices in the Philippines are far from ethical. It engages in data privacy breaches, extracting personal information from borrowers’ devices without consent. This jeopardizes borrowers’ security and privacy.

  • Pros: Instant approval, various loan options.
  • Cons: Hidden charges, unauthorized use of personal data.
  • Overall Score: 3/10

#8. CashJeep – Illegal online loan apps Philippines

CashJeep is another name on the list of illegal online loan apps Philippines. It draws borrowers in with easy application processes but entraps them with sky-high interest rates and aggressive collection methods.

  1. Pros: Fast loan approval, convenience.
  2. Cons: Skyrocketing interest rates, inadequate customer support.
  3. Overall Score: 2/10

#9. Pesopop – List of illegal loan apps Philippines 2023 gcash

Pesopop remains list of illegal loan apps Philippines exploiting the goodwill associated with its name to mask its predatory lending practices. It targets vulnerable individuals and forces them into oppressive loan terms.

  • Pros: Quick loan processing, no paperwork.
  • Cons: Unregulated lending, lack of borrower education, perpetual debt cycle.
  • Overall Score: 2/10

#10. Lemon Loan – Online loan app illegal

Lemon Loan’s online loan app illegal Philippines makes it appealing to those seeking quick loans. However, its hidden charges, excessive interest rates, and unscrupulous tactics reveal its true nature.

  • Pros: User-friendly app, quick loan turnaround.
  • Cons: Excessive interest rates, aggressive collection practices.
  • Overall Score: 2/10

Avoiding Illegal Payday Loan Companies

Follow these recommendations to steer clear of illegal payday loan companies:

  • Before you ask for a loan, make sure the lender is licensed. You can do this by calling or checking the website of your state’s regulatory agency.
  • Compare the interest rates and fees of different lenders and choose the one with the lowest total cost. Avoid lenders who have hidden fees, rollover fees, or prepayment fines.
  • Read the loan agreement carefully and make sure you understand it. If you have doubts or worries, ask questions.
  • Make sure you’re only taking out a loan that you can comfortably repay on time. Don’t get multiple loans or lengthen the length of your loan.
  • If you can’t pay back your loan, talk to the person who gave it to you and try to work out a payback plan. Don’t ignore or stop paying your loan.
  • If you think you’ve been taken advantage of by an illegal payday loan company, tell the officials and get legal help. You might be able to get your loan canceled or fight the lender for money.

Online Lending App Harassment Victims

Prominent experts emphasize the need for accountability and support for victims of online lending app harassment. They stress the importance of addressing regulatory gaps to prevent further exploitation of vulnerable individuals.

  • Benjamin Diokno: “Online lending app harassment victims are often left with no choice but to endure the harassment, as they may be in a vulnerable financial situation and feel pressure to repay the loan. So lenders should be held accountable for their actions, and victims should be provided with support and resources to help them navigate the situation.”
  • Mr. Raul Fabella: “Online lending app harassment victims should be provided with comprehensive support and protection. This may include legal aid, counseling, and financial assistance to help them recover from the ordeal. It is essential to address the root causes of the problem, such as lack of regulation and oversight, to prevent further exploitation of vulnerable individuals.”

FAQ: Frequently Asked Questions about Illegal Online Lending Apps in the Philippines

Are loan sharks considered illegal?

Yes, loan sharks are categorized as illegal lenders. They operate outside the bounds of the law and typically target individuals in urgent need of funds but unable to obtain a loan from a legitimate source. These unlicensed lenders impose exorbitant interest rates and often resort to intimidation tactics, rendering their activities both perilous and unlawful.

Is it against the law to default on a loan?

Defaulting on a loan is not inherently unlawful, but it can entail severe financial repercussions. Loan shark entities can pursue legal actions to recover the outstanding debt, which may include seizing collateral or pursuing a court judgment. Moreover, loan default can adversely affect your credit score and hinder your ability to secure future loans.

What leads a lender to become illegal?

A lender can become illegal if they impose exorbitant interest rates, engage in harassment or threats against borrowers, or operate without the requisite license. These unauthorized lenders are commonly referred to as loan sharks, and they frequently employ social media or influencer marketing to entice potential victims. It is advisable to steer clear of them and report their activities if encountered.

Who monitors the legality of online loan applications?

The legality of online loan applications is under the purview of several regulatory bodies, chiefly the Securities and Exchange Commission (SEC) and the Bangko Sentral ng Pilipinas (BSP). These organizations ensure that online lending providers adhere to pertinent laws and regulations, safeguarding consumers from fraudulent or abusive practices.

Conclusion: Choosing Safety Over Risk

In conclusion, it is strongly recommended that borrowers steer clear of the perilous list of illegal online lending apps in the Philippines in 2024. Instead, explore loans from legitimate lending institutions that offer transparent terms and reasonable interest rates. Always conduct due diligence to ensure a safe borrowing experience. Remember that financial security and peace of mind should never be compromised for the allure of quick cash. Protect yourself, make informed decisions, and safeguard your future.

Don’t miss: Discover the Top 10 Trustworthy Online Loan Options in the Philippines – Just an ID Card Is All You Need!
 
Online Loan
Interests
Loan Amount
Loan Term
Borrower Age
SEC License
APR 143%
₱1,000 - ₱25,000
from 3 to 6 months
21 -  70 years
SEC Registration No. 202003056. Certificate of Authority No. 1272
APR 145%
₱500 - ₱20,000
from 3 to 6 months
22+ years
Certificate of Authority To Operate Number: 1254
from 0%
₱1,000 - ₱20,000
from 10 days
22 - 70 years
Registration № CS201726430, CA №1181
0.16% per day
₱500 - ₱25,000
from 2 to 6 months
20 - 55 years
SEC Registration No. CS201918702. Certificate of Authority No. 3169, NPC Registration No. PIC-001-791-2021
APR 84%
₱5,000 - ₱50,000
from 6 to 24 months
18+ years
APR 365%
₱1,000 - ₱20,000
7 or 14 days
18+ years
Company Registration No. CS201951088 and Certificate of Authority No. 2918
₱5,000 - ₱25,000
from 6 to 12 months
18 - 68 years
Reg No. CS201602333
APR 143%
₱1,000 - ₱20,000
22 - 70 years
Registration № CS201804564
APR from 0% to 427%
₱500 - ₱25,000
from 3 to 12 months
18+ years
Latvian business number 43603085405
APR from 4% to 916%
₱1,000 - ₱25,000
from 3 to 12 months
18+ years
from 0%
₱1,000 - ₱50,000
up to 12 months
20 - 65 years
SEC Registration No. CS201908275 SEC Certificate of Authority No. 2990
APR from 30% to 365%
₱500 - ₱25,000
from 91 days to 2 years
18+ years
from 0%
₱1,000 - ₱25,000
18 - 70 years
registration number: 14523902
from 0%
₱1,000 - ₱25,000
18+ years
registration number: 14523902
APR from 4% to 916%
₱1,000 - ₱25,000
from 30 days
18+ years
1.3% per day
₱1,000 - ₱30,000
from 30 days
20 - 65 years
CS20200000915
APR from 0% to 427%
₱500 - ₱25,000
from 3 to 12 months
18+ years
43603085405
APR 180%
₱1,000 - ₱25,000
from 3 to 12 months
20+ years
APR up to 180%
₱1,000 - ₱25,000
from 3 to 12 months
20+ years
5/5 - (6 votes)

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