Stay informed and do not fall prey to a lender scam
Personal loan scams are fake schemes by lenders to trap you and collect money from you in an illegal way. Lenders who carry out personal loan scams intend to collect your personal information and fees to take advantage of it.
Also, they have no intention of providing you with the loan as well. Fortunately, there are certain factors that can be checked before opting for a loan.
Lenders obtain your personal information through a personal loan scam without actually lending money.
They even do not make a credit check and get all your information. Some lenders make unrequested loan offers and disappear upon collecting your information or collateral.
Staying away from personal loan scam
Many lenders offer loans to trap the customer and get all the required information. Usually, they offer bad credit personal loans.
In the UK, this is a common form of borrowing. Since these loans are lucrative and attract people, many borrowers become victims of these fraudulent activities.
You have to keep an eye on these fraudulent activities and raise the alarm in case a lender contacts you with the same conditions.
You can read reviews about these lenders online and be conscious before making any decision.
Ways to identify a loan scam
If you are looking for signs for a fake lender, read out the points below.
- The lender directly contacts you
Usually, without applying for a loan, you do not get calls from lenders. You may get prescreened calls depending on your credit history when applying for a loan.
But if you are being contacted without applying for a loan, be cautious. Personal loan scammers normally contact the borrower through phone or in person as it is a better way to get access to personal information.
Also, it will help them to get information about the borrower’s bank accounts.
To be clear about your lender, you can check the lender’s number on the state attorney general’s website. This website authenticates the lender’s existence on its board.
If the lender is contacting you directly and is assuring your approval without any cross verification, be careful and do not give any information to the lender as it is likely to be a scam.
- The lender assures Loan Approval
Another indicator of fraudulent loan activity is the guarantee given by the lender. If the lender is guaranteeing you the loan approval irrespective of your bad credit score, take a step back and report.
Usually, a lender offers a loan on various factors such as credit history, employment, debt-to-income ratio, etc. If the lender is persistent on guaranteed approval, it’s a scam.
- No credit check is required.
Lenders who do not require your credit score for your loan approval are fraudsters. Every personal loan a lender or bank offers requires a detailed credit score check.
This is carried out to minimize risk from the borrower’s side. The lender also runs a credit check in case of bad credit. Therefore, credit checks are an important part of the loan process. If that is missing, it is an indication of a scam in process.
Whenever you feel that you need a loan today on benefits from a direct lender, connect with the authentic one. An authentic lender will clear all the terms and conditions before offering any amount to you.
- The lender fee is not disclosed.
Every lender has a fixed fee that they charge from the borrower when they offer funds. Personal loan scammers usually do not disclose the fees upfront.
The lender is deliberately vague about his fees and pressurizes the borrower to sign the loan contract as soon as possible.
All the legitimate lenders are open about their fees, and most have them have published their fees on their websites. Upon non-disclosure of the fees, you are likely to get trapped in a scam.
- You are asked to make a payment through a credit card.
Usually, the borrower wishes to pay the fees in any form. If the lender forces you to pay the fees through credit cards or gift cards, you are likely to become the target of a scam.
Normally, if the lender offers any loan to you, such as pound 3000 loans for bad credit, they ask for the traditional payment methods such as online or cheques.
Getting a payment request on the phone or asking for a gift card should be considered a red flag and avoided. If you are finding something odd in your dealing, immediately raise this. Do not fall prey to it.
- No website of the lender
Banks and lenders have a secure website as they handle a lot of confidential information such as account statements, social security numbers, login credentials, etc. Be alert if a lender approaches you and does not have a secure website.
To cross-check a lender’s website, you can check the HTTPS prefix of the website to check if it’s secured. If the website is not secure, you will likely be trapped in a scam.
If you are clueless about checking the authentication of a website, take help. You can take expert help and clarify your doubt.
Make sure that you are not getting into this scam. Once you are aware, you can educate people around you. Be a guide to them and help them to stay away from imposters.
- There is no physical address.
Legitimate lenders always have a physical address in the form of an office from where they operate.
An office not only gives surety to the borrower but also makes the lender credible and accountable. A physical address is essential from a legal point of view. It is not the case that every lender with no physical address is fake.
There can be exceptions. But most of the time, a physical address is required to carry out dealings with the borrowers.
With the increasing number of frauds, it is very important for borrowers to be careful and alert. You have to be very careful about the information that you share online on various websites, as a fraudulent lender may watch over you. Follow your instinct and always look for registered lenders.
Ailsa Adam is the Editor-in-Chief and former content head at Hugeloanlender. She has been a valuable member of the content strategy team since 2017 due to her abundant experience in the finance sector. Passionate about helping individuals navigate the world of loans and personal finance, she has dedicated herself to acquiring extensive knowledge on various financial products. Before her role at Hugeloanlender,
Ailsa worked as a seasoned journalist and writer, specialising in creating informative blogs and articles on diverse loan types. She is known for her meticulous research and commitment to delivering accurate and engaging content. She holds a degree in MBA Finance and has a keen interest in creative writing and art.