Watch Out For These 5 Personal Loan Frauds

Personal loans can be of huge help to people when they want to spend a lot on certain activities without depleting all their funds. But they can also make you vulnerable to fraudulent attacks during such times. Lots of people have been victims of scams over the years. But in most cases, it was because the individual ignored his or her better judgement in pursuit of lower interest rates or other juicy benefits. But if you are equipped with enough knowledge, you can safeguard yourself from such scams.

Personal Loan Frauds

Here is a look at the personal loan-related frauds prevalent and the steps you need to take to protect yourself:

1) Scam of the processing fee

Imagine a situation where you apply for a personal loan. You fill out the necessary forms and the lender sends over an agent to collect the required documents. You are all set to receive the loan amount in a day or two. But at the last minute, the agent asks you to pay a certain amount upfront as processing fee. There is nothing unusual in the request, right?
Wrong!
Authentic lenders do not charge processing fees upfront. The general practice is to deduct the fee from the total loan amount. Anyone asking otherwise is a fraudster looking to disappear with your money. 

2) The limited offer scam

Never buckle under pressure if the salesperson announces an ultimatum on the loan offer. This usually happens when the lender is not real. All they want is your personal details. You will generally hear something like this: “Hurry up or these attractive rates will expire by 5 ‘o’ clock in the evening. Now just give us your debit card details before we proceed.” 

After this, the only place to proceed is the police station. Once you get quotes on interest rates from a bank or Non-Banking Finance Companies (NBFCs), you can be assured that they will follow up. However, genuine lenders give you time to think about your options before you make your decision.

3) The invisible company

The arena of personal loans has changed dramatically over the years. Apart from banks, there are lots of Non-Banking Finance Companies (NBFCs) that offer loans and many say that NBFCs are actually better than Banks when it comes to offering home loans. But before taking the loan, check if the company is genuine. You will find numerous scammers out there with the sole purpose of stealing your money. 

It is in your best interest to research the company’s credentials. First of all, check if the company has a physical presence. Does it have a registered address? Call the telephone number and look for their website online. Also, search for borrowers’ reviews of their services. Better stay away if the company doesn’t even have an address or registered phone number, 

4) Credit history? Who cares

As a borrower, it is your duty to find out as much as possible about the lending company. In turn, any genuine company will want to collect necessary information about prospective borrowers. They will want your credit score, your income slips, and other documents which prove that you have the capability to repay the loan. No company wants to give out money to someone who is prone to default. So, you need to be on alert if the lending company says that it is not interested in your credit score. This usually means that the lender has no intention of lending you money.

5) Trickery in the virtual world

Unlike their previous counterparts, fraudsters of this generation have it very easy. No more standing under the hot sun to rob an unsuspecting victim. They can do the same thing without stepping out of their house. Welcome to the world of phishing scams. Here, a fake website is created that perfectly resembles a popular banking site. When you log on to the site to take a personal loan, the fraudsters collect information such as your account number and passwords. And before you even realise, funds are withdrawn from your account. 

To protect yourself from such frauds, always be mindful of the URLs you click. You never know in which site you may end up. Also, make sure that the web address is preceded by “https”. Here, the “s” stands for “secured” and it is a proof that the website is authentic. 

Bottom line

These methods can help you identify scams when you come across them. However, scammers are always on the lookout for new ways to take your money. The onus is on you to protect your savings. If something happens, there is no point in saying: “I didn’t know.” When it comes to money matters, you need to always be alert at all times and keep the above points in mind.

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