- Date : 17/12/2021
- Read: 3 mins
Find out how you can keep a safe distance from fraudulent personal loans.
Personal loans have become the hottest-selling loans today as they allow quick and easy financing for your financial needs. On the flip side, they have caught the fancy of financial scammers too, who target consumers through telemarketing, email marketing, SMS, social media marketing, etc.
How do they pull it off? Well, once you pay a fee or deposit an amount for the promised loan, they vanish. You end up with no loan and a lighter wallet. Bad, isn’t it?
How to avoid loan scammers
You just need to be a little careful and check the details. Here are some ways to spot personal loan scams:
1. The company name is unfamiliar
The first indicator is the identity of the company offering the loan. If you find a new lender that you have never heard about, it might be a scam. Check the lender’s credentials online and the certifications before you apply for a loan.
Related: Why A Fintech Company Can Be An Ideal Place To Get A Personal Loan?
2. They charge an upfront joining fee
The most common aspect of a scam is a payment required from your end. Before you even apply for the loan, if the lender asks for a fee, it should be a red flag. Personal loans involve a processing fee, but that is payable only after you apply for the loan. If the lender is asking for an upfront fee, it is most likely a loan fraud.
3. The interest rate sounds too good to be true
Personal loans are unsecured loans, which is why they have a slightly higher rate of interest. Most lenders charge interest rates starting from 9% or 10%. If a lender is charging extremely low rates, like 5% to 7%, beware of such offers. No lender offers unsecured loans at these rates.
Related: Types Of Personal Loans You Must Know About
4. Your credit history is not checked
Your CIBIL score is an important indicator before a loan is sanctioned. If the lender promises the loan without looking at your credit score, things look fishy. Remember that bad credit history is a real deal-breaker when it comes to loans.
5. Your KYC documents are not asked for
Even the most convenient personal loans require basic KYC documents, income proof, and your PAN for processing your loan application. If the loan is available without any form of documentation, it is a scam.
6. They invoke a sense of urgency
Lastly, scammers stress the fact that their loans are ‘limited period offers’. Personal loans can never be ‘limited period offers’. So, if a sense of urgency is being created, stay away from such dubious ‘offers’.
Related: Is Gold Loan A Better Deal Than A Personal Loan?
Learn to read between the lines so that you can spot personal loan scams. Don’t fall into the honey trap of too-good-to-be-true offers. Do your due diligence and avail of personal loans only from trusted institutions.
