Popular personal loan scams and how to avoid them

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Popular personal loan scams and how to avoid them

  • Highlights

  • Be wary of up-front costs

  • Ads guaranteeing loan approval are a red flag

  • Cross-check lender’s web address

  • Stay away from time-bound offers

When you’re under financial emergency and need money quickly, a personal loan can seem like a solution to instant money. However, a person is often vulnerable during medical or personal emergencies, and availing a personal loan through the regulated system at such times can seem hard. Moreover, there are fraudsters that will take advantage of your desperation, so you need to be careful.

However, there’s no need to be skeptical. There are several telltale signs of personal loan scams, and once you’re aware of them it’s unlikely that you will fall for them. Here are a few of these signs:

Demanding up-front cost

You shouldn’t pay to get a loan. One of the most popular loan scams out there is asking for a fee before granting the loan. Any loan that demands money beforehand for “insurance” or “processing” is not legit.

Financial institutions do charge a processing fee, but the amount is deducted from the loan they advance to you.

Guaranteed loan approval

You will want to stay away from any loan ad that says ‘loan approval guaranteed’. There’s no such thing as a guaranteed loan. Loan approval depends upon several factors, including your credit history and verification of your information.

Online phishing

If the website of the lender doesn’t have an ‘s’ after the ‘http’, that’s a red flag and you should back away. The lack of an ‘s’ means that the website is not secure and is a possible sign of a scam. If you take a loan from such a website, they can make use of your personal information, including your bank account number and password.

Most personal loan scam websites imitate the official websites of banks and other financial institutions. So, you should always double check the web address carefully.

No credit check required

If a lender is not concerned with your credit score, and is willing to offer a personal loan with the standard rate of interest, be wary. A legit financial institution will want to know whether or not you can pay the loan back on time, and are therefore, concerned with your creditworthiness.

Time-bound offers

If you get emails or see ads that urge you to take a loan “now” because the offer is for a limited time-period only and will expire soon, be cautious. Banks offer loans at steady rates based on your credit history. Such pressure tactics are used to create a sense of urgency and trick you.

If you’re alert, cross check the details, and opt for known financial institutions, you’re safe. The pre-approved offers from Bajaj Finserv on their loans and other financial services make getting a personal loan safe, easy, quick, and convenient.

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