Most people avail personal loans due to personal and medical emergencies. It is vital for individuals to do thorough research about the lender they are availing a personal loan from as there are many fraudsters who take advantage of an individual’s emergency. Many scammers make false promises to individuals without the intent of lending money.
However, there are several signs that individuals can look out for to find out if the lender is scamming them. Given below are some of the common ways where fraudsters cheat individuals when providing a personal loan:
- Credit history not required: If lenders are willing to provide a personal loan at the normal rate of interest without checking your credit history, then it can be a scam. The credit score is the main criteria that is checked by banks or any other financial institutions when providing a personal loan. Lenders check the credit score even if it’s low, especially when it comes to providing a personal loan as they are unsecured loans. Scammers are not worried about your credit score because they are more concerned about getting your personal information.
- Wanting a payment to be made initially: Personal loans are mostly taken due to an emergency, therefore, you do not have to pay to get a personal loan. A common scam that occurs is fraudsters asking for a fee up-front for the loan to be sanctioned. Any loan that depends on you paying a fee initially is not legit. Even though there is a processing fee that is charged by financial institutions, it is deducted from the loan amount.
- Loan approval is guaranteed: It is important to keep away from ads where it is mentioned loans are guaranteed. Approval of a loan depends on the verification that is done by the lender and the credit history of an individual. Therefore, there is no such thing as a guaranteed loan, and if mentioned, it is a scam. Fraudsters usually offer guaranteed loans to demand a fee to be paid initially.
- Incomplete loan offer: As per the Truth and Lending Act, 1968, it is mandatory for all lenders to provide all the terms and conditions of the personal loan to individuals before they sign it. In case the terms that are provided to you has information missing or has spelling errors, it could be a scam.
- Phishing: Legitimate websites of lenders start with ‘https’ and not ‘http’. In case the lender’s website starts with ‘http’, it is vital to stay away from such a lender. ‘Http’ also means that the website is not secure, and scammers can take advantage of the information provided on such websites. It is vital to check the web address of the bank or financial institution before providing them your personal information.
- Offers that are available for a limited period: If lenders are providing loans that are available only for a certain duration of time, it is best to stay away from them. Legitimate lenders provide loans at fixed interest rates depending on your credit history. Loans that are available only for a limited period, are a way for fraudsters to trick you into providing personal information.
- No physical address of the lender can be found: If you are unable to find any address or information on the lender, it is best not to avail a loan from them. Scammers usually don’t put up any contact information to avoid any legal action that can be taken against them.
- The lender is not registered in that state: Lenders must register for a license at that particular state. It is best not to contact lenders who are not registered in your state even if they are registered in other states.
- Lenders asking for a payment in the form of a gift card: Scammers sometimes request for payments to be made in the form of a gift to sanction the loan. Paying in the form of a gift card is the same as paying by cash, and it cannot be traced. No reputed lenders will ask for any payment before a loan is sanctioned and it is best to stay away from lenders who demand one.
Factors that determine whether a lender is legit
Given below are some factors that individuals must consider before signing a contract when availing a personal loan:
- Online reviews and ratings are available: Legit lenders will have reviews and ratings online. Check the reviews online before availing a loan from the lender.
- Terms of the loan are clear: The terms and conditions that are provided in the contract from a legit lender will be clear and all details such as loan amount, monthly instalments, the rate of interest, penalties if the instalment is not paid, and the final cost of the loan will be mentioned.
- The lender is easy to contact: Legit lenders are easy to contact for any queries regarding the loan. State licensing and contact information must be easy to find.
- Credit score check is done: Checking credit history and verification are done by legit lenders. If no verification is done or credit history is not checked when providing a loan, it can be a scam.
- Secure website: The websites of legit lenders are secure and are encrypted. If the website of the lender is not secure, it is best not to apply for a loan from that lender.
The above-mentioned tips can help individuals stay away from frauds and scams when availing a personal loan. It is vital for individuals to double-check all the information when applying for a personal loan. Opting for a personal loan from reputed lenders can help in staying clear of frauds or scams. To Click Here to find more Information about Personal Loan.