Personal Loan Scams: Best Ways to Steer Clear of Them

Thanks to changes in technology and attitudes, money lending has become more accessible and convenient than ever. The only not-so-good news, however, is that this came with an upsurge in loan frauds, and they can scam your money out of you if you’re not careful. 

So, how do you avoid these personal loan scams? How do you tell them apart from legit moneylenders? Read on and find out. 

Be wary of front-end fees.

One of the most evident signs of a loan scam is when one asks for an upfront fee that can be described as either a “processing fee” or an “advance fee.” Scammers ask you to pay for something before they release the loan, saying it is a charge for “administrative purposes” or “insurance.” The truth is, a good lender will never require money upfront before advancing the loan; instead, the fees are usually in the loan repayment.

If a lender requires a prepayment fee, especially by means that cannot be traced, such as cash, gift cards, or wire transfers, then it is probably a scam. Avoid those offers and report them if you can. Legitimate lenders clearly state all fees and add them to the loan when disbursed, not before.

Beware of Claims of Guaranteed Approval

Real lenders check your eligibility first before issuing the loan. Hence, it is a major red flag when you ever find “guaranteed approval,” regardless of a credit score or financial conditions. These tactics are generally adopted by scammers as bait for people with relatively poor credit and attract people towards them by offering “no questions asked” kinds of loans.

Remember that legit lenders have standard application procedures. This will include a credit check, income verification, and debt-to-income ratio evaluation. If you encounter a lending business that doesn’t have the same process, leave the premises. 

Search the internet about the Lender

Scammers normally present themselves as legitimate. Some of them even have actual websites. So, research the lender’s online presence before filling out any loan application. Look for their name in the Ministry of Law’s registry of licensed money lenders. If they’re not there, then they’re fraudulent. 

It also helps to check the moneylender review. This way, you can confirm your suspicions if you feel that a particular moneylender is a scam. You might even find stories online that have similar experiences as you.

Do not disclose sensitive personal information

Scammers often demand sensitive personal details such as your national identification number, bank account information, or credit card details in order to “process the loan.” While reputable lenders do require some personal information to verify your identity, they won’t ask for it in a suspicious or unsecured manner. They also won’t ask for your credit card details. 

Look for Professional Communications Standards

Legitimate lenders go through standard and official means of communication such as phone calls, emails, and online websites. They also use professional and formal language when communicating. On the other hand, loan scams often use informal language in an email and frequently have grammatical or spelling errors. Poor tone and careless errors are usually indicative of illegitimacy within that operation.

Trust Your Instinct

Always be very attentive to your gut instincts. If you feel like something’s off with the lender, whether it’s the terms, their tone, or approach, steer clear of them. Even if the lender does not have a hint of fraud that the other party will exhibit, it would be wise to walk away. After all, 

Conclusion 

Be cautious if a request seems unusual or requires odd action. Never be afraid to ask for a second opinion if something seems suspicious—sometimes someone will catch red flags you might not have picked up. Of course, it is always tricky and cleverly convincing; however, there are certain measures to avoid falling into the trap. 

Always remember that serious lenders don’t force you, don’t charge a prepayment fee, and certainly can’t promise something ridiculous. With careful research, checking of the lender’s credentials, and following intuition, one should be able to navigate the loan options without falling into scams. 

It’s much better to be careful in your search for a loan from a trusted lender than to risk damage to your finances from a scam. Your personal information and your financial security are always worth extra effort to protect.