5 sure ways to spot quick loan scams
In this age of digital evolution where most financial institutions and quick loan businesses and apps are operating online, scammers too masquerading as loan companies have perfected their fraudulent acts to defraud unsuspecting loan seekers.
Learning how to check if a loan company is legitimate or not can help you avoid being a victim of fraud.
The following are some easy ways to identify potential quick loan scammers and scams.
1. The Lender is not interested in your credit history:
Reputable loan companies and lenders make it clear they they’ll need to look at your credit history to determine your loan request eligibility. Most Lenders need to know whether you have a history of paying bills on time and in full to make sure you’ll be diligent about repaying a loan.
Conversely, fraudulent businesses aren’t interested in your creditworthiness and timely repayment. In fact, they tend to seek high-risk borrowers who are likely to fall behind on loan payments and, as a result, incur excessively high late fees and penalties.
Takeaway: Do your research and read the fine print. Make sure you’re working with a lender that’s interested in your previous financial history.
2. The Lender demands a prepaid card:
Some scammers have been known to require prepaid debit cards from borrowers, claiming that they need it for insurance, collateral or fees. This is a scam.
Legitimate financial institutions may charge a fee for your application, appraisal or credit report, but those charges are deducted from your loan.
Takeaway: Never use untraceable payment methods like a prepaid debit card when dealing with a Lender or quick loan company.
3. The Lender has no physical address:
Every Lender you’re interested in should provide a physical location. Even then, you will still want to plug that address into Google Maps. In some cases, businesses running personal loan scams will list addresses that are actually vacant lots.
If you don’t find any sign of the physical address, avoid the Lender. Many fraudulent businesses would rather be untraceable so they can avoid legal consequences.
Takeaway: Don’t do business with a company that cannot provide a physical address, and always verify that the address is legitimate before you proceed.
4. The Lender pressures you to act immediately:
Don’t fall for the urgency plea. One of the hallmarks of personal loan scams is giving you an immediate deadline to sign on for a loan because the offer expires quickly – possibly the next day.
Lenders that use such high-pressure tactics could be up to no good. It may be a ploy to get you to make a rash decision.
Takeaway: Legitimate Lenders may impose deadlines for accepting a loan offer, but you will likely have weeks, not days to decide whether to accept the loan.
5. The Lender is not transparent about its fees:
Scam Lenders will avoid posting their fees prominently on their websites or disclosing them when asked. They may also tell you that you’ve been approved for a loan and then demand a fee from you upfront.
Hidden fees that are imposed after loan approval are a red flag. You should walk away from any company that follows this practice, particularly if you’re told that the upfront money is for such thing as “processing”, “insurance”, or “paperwork”.
Takeaway: Legitimate Lenders may charge application, credit report or appraisal fees. However, those fees are clearly disclosed on the Lender’s website and are deducted from the loan amount.
The Bottom Line.
When searching for a legitimate loan company, check for contact information which should be readily available on the website, even if it’s an online-only Lender.
Also, investigate online reviews – customers postings online will have the best insight into the experience of working with a Lender. Do your research and compare multiple Lenders to make sure you’re getting a good rate from a trusted source.