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5 Commandments to Swear by when taking a Loan

  • Highlights

  • Take a loan only when you need it and after careful consideration

  • Never borrow more than you can repay

  • Keep the loan tenure as short as possible

  • Insurance cover is a great option for big loans

If we were to live in an ideal world, every individual was to possess enough money to fulfil all their needs and requirements. However, our world functions differently. Many of us have to opt for borrowing money from different sources to ensure that our goals are met. And, it’s always best to borrow from reputed financial institutions only. Late last year, Google removed nearly 100 money lending apps for lapse in compliance norms and loan frauds being on a continuous rise, it’s highly important for a borrower to be cautious of all the signs to differentiate between a genuine lender and a fraudster.


The advent of technology in the financial industry has changed the way it functions. Online calculators allow customers to find the cheapest loans and banks have started taking way less time to process and approve loans. Although technology has helped make the process more efficient and faster, the canons of prudent borrowing, more or less, remain the same, such as:

• Steering clear of loan frauds in India.
• Not borrowing more than what is needed.
• Taking a long-term loan only to enjoy the tax benefits on the interest you pay, are a few things that need to be kept in mind.

To help you avoid being cheated in such scenarios and spot a fraud lender, we list down some red flags for you to keep in mind. If you come across these signs, there is quite a possibility of your lender being a fraud.

1. No inquiry about your payment/credit history: One of the upfront disclosures that you are asked for by any lending institution is your credit score and history before a loan is sanctioned. All authentic and reputable lenders make it clear that your credit history is of extreme importance and might even ask for reports from major credit bureaus of your country. It is essential for them to know if you have been paying your bills in full and on time. This acts as proof of your diligence towards repaying a loan.
However, in the case of loan scams, the individuals are not interested in timely repayments. In fact, they look for people who slack in making payments on time and hence charge them with extremely high late fees and penalties.


2. The lender is not registered: The banks and money lending institutions should be registered in the country/ state that they are functioning in. If you notice that the party you are dealing with is not registered anywhere, you must consider this as a major red flag. Check the lender’s website for the areas they are functional in and try and get feedback from previous clients of the lender. All authorised lending institutions are listed on the RBI website.

3. Direct calls or visits from the lender: Authentic and legitimate lenders advertise their loan services on their official website. If you are contacted on call or through an email for a loan offer or service, it is best to be on your guard. In some cases, you might even face a door-to-door solicitation, which is never the case with verified lenders. So, double check every loan offer from Bajaj Finance Limited at https://www.bajajfinserv.in/reach-us .

4. No physical address: It is important to ensure that the lender you are interested in has a physical address that can verify the legitimacy of their business. You might want to look up the address provided as many individuals running a loan scam often provide vague or wrong address. A lack of a physical address is a red flag that you should immediately recognize and step away from. Scam operators try and remain untraceable to avoid legal consequences.

5. Pressure to act urgently/ limited period offers: If you are reached out by lenders and informed about limited period offers or special discounts, do not act on them. The urgency plea is often a sign of a loan scam. Loan scams in India often include this hallmark of giving you an urgent deadline to get the loan as soon as possible. It might be a ploy to force you into taking a rushed decision ignoring the essential formalities that would otherwise prove the lender’s lack of authenticity.


Most of us consider loans to be an easy option that helps make our lives easier and achieve our goals. Despite this advantage, we must be careful of the decisions we take in terms of borrowing and be mindful of the precautions to stay away from loan frauds and scams, rampant these days. Insuring your loan is a good option to stay protected in the long run. Loans should be well-planned to avoid complications.

Caution – Be careful while selecting your lender; always verify their authenticity on their official websites or at www.rbi.org.in and pay your loans on time for a healthy credit score.

Savdhaan Rahein. Safe Rahein.

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