Personal Loans can help you consolidate debt, pay off high-interest credit cards, or get money at a set rate when you need it. Unfortunately, many con artists prey on customers seeking a personal loan or other forms of credit.
A personal loan scam is a means for fraudulent lenders to gain your private information or charge you fees without really lending you money. The most prevalent personal loan scams involve fraudsters obtaining your personal information or finances by proposing a loan with no background or credit checking. While others make unsolicited loan offers and then will disappear after collecting upfront fees or collateral.
While finding a reputable payday loan online company is a challenge nowadays, here’s how to spot and detect personal loan scams online.
Their Website Is Fishy
Check to see if the lender is licensed to provide loans in your state. Also, check if there are any wrong spelling or grammar mistakes. While many fraudulent are improving their appearance, it’s often simple to recognize a scam website by paying attention to the syntax.
Information about a credible financial institution should be available on the internet. Simply decline if you can’t locate any information about a particular lending company or any of its products.
In addition, check the URL of the lender company’s website to see if it uses HTTPS. Secure is what it means in HTTPS. Thus, if the company’s URL has no S and has HTTP only, then it is not a secure site for collecting personal information and makes it a red flag for a scam.
Requires No Credit Checking
If someone offers you a loan without first verifying your credit, you should decline. Credible lenders check the credit history to see if you can be able to repay your loan on time. And, underwriting is a requirement for lenders in order to assess and price a loan effectively.
While Fraudsters, on the other hand, are unconcerned with whether or not you will pay back the loan. They‘re more interested in acquiring access to your money or bank account details upfront rather than lending you money.
Furthermore, lenders claiming that everyone can acquire a loan and have exorbitant terms are most likely illegitimate lenders. Although it is arguable that every lending company that doesn’t run a credit check is a scam, be wary of offers that seem too good to be true.
Asks For Upfront Payments
You are most likely a victim of a personal loan scam if your lender requests payment of costs before the application process or shortly after the loan approval. Although many lenders charge fees for services, this is legal if the borrower is aware of the fees ahead of time and agrees to them in exchange for the money they require.
What makes it a red flag is collecting a fee for a loan that a formal agreement has not guaranteed. Many fraudsters demand money from applicants before their loan is even approved. Some will simply vanish after receiving this payment, never to be seen or heard from them again.
To prevent this from happening, take a step back before paying someone and ask yourself if something doesn’t feel right. Look for documented information regarding origination fees on the lending company’s site.
Pressuring You To Take The Loan
Trustworthy lending companies will not compel you to apply for a personal loan or force you through the process. Also, reputable lending companies typically give consistent lending options depending on characteristics such as creditworthiness and present personal loan rates.
While some lenders may provide fee waivers for a limited period, these discounts are usually limited to fees and have no bearing on your interest or other loan rates.
That’s why make sure you’re not under any pressure to make a decision right now or to reveal sensitive information. Because for example, it’s most likely a scam if a lender tries to rush you into taking out a loan by giving a cheap interest rate and then stating it’s only available for a limited period.
Unfortunately, as people’s interest in personal loans grows, so does the number of personal loan frauds. Fraudsters look for easy targets for personal loan frauds and take advantage of people’s desperate cash needs, especially in the current economy.
That’s why it is essential to keep an eye out for lenders who have these red flags, mainly if you can’t find much information about their organization. If you’re unsure, go with a lender you could trust. Hence, not only can thoroughly researching any lending company protect you from personal loan frauds, but it will also help you acquire the best interest rate available.