Google appears to be doing its part in ensuring responsible lending practices by personal loan Android apps listed on its Play Store. The company has updated its policies specifically for Android personal loan apps and on of the notable terms is that Google will ban personal loan apps that require full repayment within 60 days or less.

The other key policies are that Google will require the personal loan details to be included in the metadata so as it can determine which apps to ban from its app store as well as stating that it will only allow personal loan apps that charge no more than a 36% Annual Percentage Rate (APR). However, the APR limit is currently for the United States only.

"We define personal loans as lending money from one individual, organization, or entity to an individual consumer on a nonrecurring basis, not for the purpose of financing purchase of a fixed asset or education. Personal loan consumers require information about the quality, features, fees, risks, and benefits of loan products in order to make informed decisions about whether to undertake the loan."

Proliferation of predatory lending practice in Africa

Under the guise of digital financial inclusion, several African countries have witnessed the proliferation of digital microlending apps with predatory interest rates and administration fees as well as invasive data privacy terms of service. In some countries like Kenya, this has led to a lot of the population ending up in a cycle of debt slavery that is difficult to come out of given that the costs of some of these loans are 100% when annualized.

Kenya personal loan default statistics for 2019. Source: 2019 FinAccess Household Survey

The situation, especially in Kenya, now having a ripple effect whereby, given how digital micro lenders can automatically collect the debt, people are now defaulting on other loans they take out for example from their shopkeepers and friends. According to the 2019 FinAccess Household Survey, Kenyans are not repaying 45% of the credit (for goods taken on credit) they owe shopkeepers.

You can read the new Google Play Store terms for personal loan apps below.

Personal Loans

We define personal loans as lending money from one individual, organization, or entity to an individual consumer on a nonrecurring basis, not for the purpose of financing purchase of a fixed asset or education. Personal loan consumers require information about the quality, features, fees, risks, and benefits of loan products in order to make informed decisions about whether to undertake the loan.

  • Examples: Personal loans, payday loans, peer-to-peer loans, title loans
  • Not included: Mortgages, car loans, student loans, revolving lines of credit (such as credit cards, personal lines of credit)

Apps for personal loans must disclose the following information in the app metadata:

  • Minimum and maximum period for repayment
  • Maximum Annual Percentage Rate (APR), which generally includes interest rate plus fees and other costs for a year, or similar other rate calculated consistently with local law
  • A representative example of the total cost of the loan, including all applicable fees

We do not allow apps that promote personal loans which require repayment in full in 60 days or less from the date the loan is issued (we refer to these as “short-term personal loans”). This policy applies to apps which offer loans directly, lead generators, and those who connect consumers with third-party lenders.

High APR personal loans

In the United States, we do not allow apps for personal loans where the Annual Percentage Rate (APR) is 36% or higher. Apps for personal loans in the United States must display their maximum APR, calculated consistently with the Truth in Lending Act (TILA).

This policy applies to apps which offer loans directly, lead generators, and those who connect consumers with third-party lenders.

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