How to Avoid Personal Loan Scams

Money can’t buy happiness, but lack of money will certainly buy misery. Generally, we can’t do without money as it is an important part of us. We require money at any time to pay for wedding expenses, medical bills, fund a business, and do other things. The simpler way to get funds is through a personal loan. However, with frauds awash in the market, borrowers who need to avail of personal loans can easily get scammed.

Scams have increased lately with the rise of mobile apps and digital lending platforms. Often, scammers will tend to take advantage of those people who need money urgently, through quick approvals and affordable rates. So, it is vital to protect yourself from any fraudulent activity. It’s advisable to always get credible platforms if you want to avail an instant personal loan.

While digitalization has greatly impacted our lives today’s lives, especially with convenient transactions, it has also led to the rise of fraud and scams. The good news is that you can easily avoid these loan scams with the tips mentioned in this post.

Tip 1: Research the Lender

Before taking out a personal loan with any lender, first ensure the lender is legitimate. Check reviews from the websites and ask friends or family about their experience with the lender. You can also compare different loans. This will help you find a legit company.

First, check their rates and fees. Often, if the lender doesn’t explain the fees and interest rates well, they are definitely taking advantage of it. Doing your homework is super important, and any renowned lender will clearly state their fees and interest rates.

Check if the rate stated in the offer matches with the rates on the lender’s website. You can fill in some information to see the rate you’re pre-qualified to get.

Additionally, check the fees on the loan offer. There are some lenders who don’t charge fees, but others charge origination fees, prepayment penalties, and late fees. It is, therefore, essential that the fees stated in the loan offer match those listed on the firm’s website.

Tip 2: Don’t Pay Money Upfront

Most scammers use this tactic to get money from people. They will ask you to send money upfront during the loan application. They might even promise to give you money after receiving that payment. Therefore, you need to steer clear of such fraudsters who ask for money before they can give you a loan. Reputable lenders will not request for an upfront. It does not work like that.

Even though some lenders might charge origination fees after you accept the loan, it is usually taken from the loan proceeds and can only affect the total amount you will receive.

Tip 3: Verify the Loan Apps and Websites

Nowadays, there are many personal loan apps, which can make it challenging to know the legitimate apps you can avail a loan from. You need to verify if the apps and sites are legit before proceeding with the application. But how? Check genuine user reviews, contact information, or official customer service. Often, fraudulent apps have bad reviews and lack good customer support.

Use only secure and verified sites to apply for loans. Scammers often create fake sites that appear like websites owned by legitimate companies. Once you provide your details to the website, they use it to steal your account information, money, or your identity. To avoid being scammed, you need to check on the padlock sign in the URL and make sure the site starts with a ‘https’. Such a website is certified as secure and has not been hacked.

Tip 4: Avoid Offers That Expire in a Short Period or Urgent Application Requirements

While looking for a personal loan, carefully check those offers that are set to expire in a short time or those loans with urgent application requirements. Generally, a reputable private lender has consistent loan offers based on various factors such as creditworthiness, current loan rates, etc.

At the same time, some can offer only limited-time fee waivers, which are limited to the fees and will not affect the rate or loan terms. Thus, if you find a lender trying to pressure you to apply for a loan by providing a lower rate and claiming it is available for only a short time, it is a red flag that the lender is a scam.

Tip 5: Check the Contact Method

Reputable lenders use various methods to advertise their services. For instance, they can use online ads or even emails. This way, it can be difficult to distinguish real and fake. To be sure, check the lender’s customer support number and see if they tried reaching out to you.

Most lenders don’t call customers to lure you into applying for a loan. Therefore, you need to be wary of those lenders who go around calling customers to apply for their loans to avoid getting scammed.

Wrap up

The online personal loan world is risky and filled with scams. It is thus important to be careful and be a savior for yourself to avoid getting scammed. By understanding warning signs, doing research, verifying sites, etc., you will easily protect yourself from being a victim of loan scams.