Know the various characteristics of illegal online loans that you should be aware of so that you don’t get caught in a detrimental debt, from unclear fees to the fact that the online loan is not registered with the OJK.

In today’s digital era, online loans (pinjol) are increasingly popular as a fast financial solution. However, not all online loans circulating on the market are legitimate and trustworthy services.

Illegal online loans can trap borrowers in bigger financial trouble due to high interest rates, hidden fees, or unethical collection practices.

To avoid getting caught in illegal online loans, you must recognize the characteristics before applying for a loan. Here are 10 characteristics of illegal online loans that you need to be aware of.

1. Not registered and licensed by OJK

Legitimate online loans must be registered and have a permit from the Financial Services Authority (OJK). OJK is an institution that regulates and supervises financial institutions in Indonesia, including Online Loans.

If a loan shark is not registered with the OJK, it is an indication that the loan shark is illegal and not recognized by the state.

To verify the legality of online loans, you can check whether the online loans are registered on the official OJK website at https://ojk.go.id/id/. If the loan you are targeting is not on the list, it is better to avoid loans from that institution because they are most likely not legally valid.

2. The identity of the loan shark is unclear

Another characteristic of illegal online loans is the unclear information regarding the company’s identity. Legitimate online loans will provide clear information, such as the company name, office address that can be visited, and contact number that can be contacted.

If online loans do not provide this information, or if their website and application addresses are not listed on official platforms such as the Google Play Store or Apple App Store, then it is suspicious.

Illegal lenders often use unprofessional email addresses or change company names to avoid their legitimate tracks. This makes it difficult for borrowers to file complaints or hold them accountable if problems arise.

3. Suspicious Loan Offers

Illegal lenders usually offer loans with terms that seem too easy and without clear limitations. For example, they don’t require identity verification, credit checks, or even collateral.

Offers that are too easy can be a red flag, as legitimate financial institutions will generally conduct rigorous verification to ensure that borrowers have the ability to repay the loan.

In addition, illegal pinjol often uses aggressive marketing methods, such as SMS spamming or phone calls, which disrupt your comfort. If you receive a tempting offer and do not go through a reasonable procedure, be careful because it could be a trap.

4. Providing Large Loans Very Easily

Illegal lending often offers loans with large limits, even larger than your financial capabilities. Offering loans with long tenors and large limits is often just a strategy to attract borrowers and get them into debt.

Loan offers that seem easy can end up with very high interest rates, hidden fees, and increasingly difficult payment obligations.

Legitimate online lending usually provides loans in amounts that are appropriate to the borrower’s capacity, and does not offer large loans with a process that is too easy.

5. Interest and Fees Are Not Transparent

Illegal loans tend to be non-transparent in terms of interest and fees. They may offer very low interest rates at the start, but then add hidden fees or change interest terms without clear notice. This can make your total payment much larger than what you originally paid.

Legitimate lenders are required to provide complete details regarding interest, administration fees, and other fees associated with the loan, and ensure that this information is clearly and transparently available from the start.

6. There are no clear payment terms

Illegal lenders often do not provide clear information about payment methods or detailed payment terms. They may not provide details about payment terms, payment methods, and penalties for late payments.

This can leave borrowers confused or trapped in payment obligations that they do not fully understand.

A legitimate online loan will always provide clear information about the terms and conditions of payment, including how to pay installments and how to manage late payments transparently.

7. Unethical Billing

If you are late in paying your loan on an illegal loan, you may face unethical collection. Illegal loans often threaten, harass, or even contact family and friends to collect debts. They may also disclose your personal information without permission.

Legitimate Pinjol will follow the applicable regulations in terms of collection, which must not use intimidation methods. Legitimate lending institutions also provide a complaint system to resolve problems in a fair manner.

8. Without Notice Regarding Changes to Terms

Illegal lenders often change loan terms, such as increasing interest or adding other fees, without notifying the borrower in advance.

These changes, which are not communicated clearly, could be detrimental to borrowers, who may find it difficult to afford the higher amounts.

Legitimate lenders will always inform borrowers of any changes to loan terms with transparency and give borrowers sufficient time to consider the decision.

9. No Clear Complaint System

Illegal lenders often do not have a clear complaint system. If you experience problems or are dissatisfied with their services, you will have difficulty getting solutions or assistance.

Legitimate lending institutions must have a complaint system that is easily accessible to customers to ensure that all problems can be resolved properly.

10. Not Having an Adequate Security System

Illegal online loans usually do not have adequate security systems to protect borrowers’ personal and financial data.

They may not use the encryption or SSL certificates necessary to keep your transactions and personal information secure. This makes your data vulnerable to misuse and theft.

Make sure that the loan you choose has a strong security system, such as the use of encryption and SSL certificates, to keep your personal data safe.

How to Avoid Illegal Online Loans

To avoid illegal loans, you can follow these steps:

1. Check Legality: Make sure the loan you choose is registered and licensed by the OJK. You can check its legality through the official OJK website.
2. Examine the Terms and Conditions: Make sure you clearly understand all the terms and conditions offered by the lending institution. Don’t hesitate to ask if anything is unclear.
3. Compare with Other Institutions: Before choosing a loan, compare offers from several legitimate lending institutions to find the one that best suits your needs.
4. Information Verification: Make sure all information provided by the loan shark can be verified and is valid.
5. Look for Reviews and Recommendations: Read reviews and recommendations from other users or trusted institutions regarding the online loan you want to choose.

With these steps, you can avoid illegal online Money Loan schemes that have the potential to harm your finances and ensure that you only deal with legitimate and trusted lending institutions.