Personal loan scams in India and how to avoid them

Personal loan scams in India and how to avoid them

From guaranteed approval to no credit checks, here is how you can spot a loan fraud in time.
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When you're facing a financial emergency and need money quickly, a personal loan can feel like the perfect solution for instant cash. However, people are often vulnerable during medical or personal emergencies, and getting a personal loan through proper, regulated channels can seem difficult at such times. Unfortunately, some scammers will take advantage of your urgent need, so you need to be extra careful.


But there's no need to worry too much. There are several clear warning signs of personal loan scams, and once you know what to look for, it's very unlikely that you'll fall for them. Read on to know the key red flags to watch out for:

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Red flags to watch out for

  • 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 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.
     

    Additional Read: Personal Loan with low CIBIL
     


     

  • Online phishing

    If the lender’s website doesn’t have an ‘s’ after the ‘http’, that’s a red flag, and you should stop surfing through such sites immediately. 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 use 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

    Be wary if a lender is not concerned about your credit score and is willing to offer a personal loan with the standard interest rate. 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.


    Additional Read: CIBIL score range for Personal Loan

  • 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 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.


  • Unsolicited communication

    Fraud lenders send messages, emails, and calls to people in urgent need of cash regarding the instant availability of loan money. Such emails and messages can make you believe that you will get a guaranteed loan without any eligibility criteria or credit score check. The motive of such lenders is usually to extract your details. Please do not fall prey to them.


    Know More: What to do in case of Bajaj Finserv Financial Fraud?

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In summary

If you stay alert, double-check all details, and choose well-known financial institutions, you'll be safe from scams. The pre-approved loan offers from Bajaj Finserv make getting a personal loan safe, easy, quick, and convenient – exactly what you need during tough times.

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Key offerings: 3 loan types

  • Flexi Hybrid Term Loan
  • Flexi Term Loan
  • Term Loan

  • Withdraw and prepay – no extra charges
    You can withdraw from your limit and prepay as many times as you want, without extra charges.

  • Instalment pattern
    You can pay interest-only EMIs for up to 24 months, after which, the EMI will consist of both, the principal and the interest. EMI is applicable only on the withdrawn amount.

  • Flexi facility charges
    Flexi facility charges applicable based on your loan amount.

  • Withdraw and prepay – no extra charges
    You can withdraw from your limit and prepay as many times as you want, without extra charges.

  • Instalment pattern
    Fixed EMIs that cover both the principal and interest on the loan amount you withdraw.

  • Flexi facility charges
    Flexi facility charges applicable based on your loan amount.

  • Amount disbursed in one go
    The entire loan amount is disbursed at the start.

  • Instalment pattern
    Fixed EMIs that cover both the principal and interest.

  • Flexi facility charges
    No Flexi facility charges.

Personal loan interest rate and applicable charges

Type of fee

Applicable charges

Rate of Interest per annum

10% to 31% p.a.

Processing fees

Up to 3.93% of the loan amount (inclusive of applicable taxes).

Flexi Facility Charge

Term Loan – Not applicable

Flexi variant - A fee will be deducted upfront from the loan amount (as applicable below)

  • Up to Rs. 1,999/- for loan amount less than Rs. 2,00,000
  • Up to Rs. 3,999/- for loan amount from Rs. 2,00,000 to Rs. 3,99,999
  • Up to Rs. 5,999/- for loan amount from Rs. 4,00,000 to Rs. 5,99,999
  • Up to Rs. 7,999/- for loan amount from Rs. 6,00,000 to Rs. 9,99,999
  • Up to Rs. 8,999/- for loan amount from Rs. 10,00,000 to Rs. 14,99,999
  • Up to Rs. 9,999/- for loan amount from Rs. 15,00,000 to Rs. 19,99,999
  • Up to Rs. 10,999/- for loan amount from Rs. 20,00,000 to Rs. 24,99,999
  • Up to Rs. 11,999/- for loan amount from Rs. 25,00,000 to Rs. 29,99,999
  • Up to Rs. 12,999/- for loan amount of Rs. 30,00,000 and above

*All the Flexi facility charges above are inclusive of applicable taxes

*Loan amount includes approved loan amount, insurance premium, and VAS charges.
Principal Holiday Facility Fees
  • Up to Rs.1999/- for loan amount less than Rs.2,00,000
  • Up to Rs.3999/- for loan amount from Rs. 200000 to Rs.399999
  • Up to Rs.5999/- for loan amount from Rs. 400000 to Rs.599999
  • Up to Rs.7,999/- for loan amount from Rs. 600000 to Rs.999999
  • Up to Rs.8,999/- for loan amount from Rs.10,00,000 to Rs. 1499999
  • Up to Rs. 9999/- for loan amount from Rs. 15,00,000 to Rs.19,99999
  • Up to Rs.10,999/- for loan amount from RS. 20,00,000 to RS.2499999
  • Up to Rs.11,999/- for loan amount from RS.25,00,000 to RS. 29,99999
  • Up to Rs. 12,999/- for loan amount of Rs.30,00,000 and above

Above charges are inclusive of applicable taxes & will be deducted upfront from loan amount

*(Loan amount includes approved loan amount, Insurance Premium & VAS Charges)

Bounce charges

Up to Rs. 1,200 per bounce.
“Bounce charges” shall mean charges for (i) dishonour of any payment instrument; or (ii) non-payment of instalment (s) on their respective due dates due to dishonour of payment mandate or non-registration of the payment mandate or any other reason

Pre-payment charges

Full pre-payment

  • Term Loan: Up to 4.72% (inclusive of applicable taxes) on the outstanding loan amount as on the date of full pre-payment.
  • Flexi Term Loan (Flexi Dropline): Up to 4.72% (inclusive of applicable taxes) of the total withdrawable amount as per the repayment schedule as on the date of full prepayment.
  • Flexi Hybrid Loan: Up to 4.72% (inclusive of applicable taxes) of the total withdrawable amount as per the repayment schedule as on the date of full prepayment.

Part pre-payment

  • Term Loan: Up to 4.72% (inclusive of applicable taxes) of the principal amount of loan prepaid on the date of such part pre-payment.
  • Not Applicable for Flexi Term Loan (Flexi Dropline) and Flexi Hybrid.

*Foreclosure will be processed post clearance of first EMI

Penal charge

 Delay in payment of instalment(s) shall attract Penal Charge at the rate of up to 36% per annum per instalment from the respective due date until the date of receipt of the full instalment(s) amount.

Stamp duty (as per respective state)

Payable as per state laws and deducted upfront from loan amount.

Annual maintenance charges

Term Loan: Not applicable

Flexi Term Loan (Flexi Dropline): Up to 0.295% (inclusive of applicable taxes) of the total withdrawable amount (as per the repayment schedule) on the date of levy of such charges.

Flexi Hybrid Loan: Up to 0.295% (inclusive of applicable taxes) of the total withdrawable amount during the initial tenure. Up to 0.295% (inclusive of applicable taxes) of total withdrawable amount during subsequent tenure.

Broken period interest / Pre-monthly Instalment interest

Method of recovery of "Broken Period Interest/Pre monthly instalment Interest" would be as follows:


EMI Date : 2nd

Scenario 1: If Loan is disbursed on 1st or post 10th of the month:

For Term Loan: BPI amount will be capitalised, i.e added to Principal amount on Due date / Deducted from disbursement
For Flexi Loans: BPI amount will be capitalised, i.e added to Principal amount on Due date / Added to first instalment

Scenario 2: If Loan is disbursed between 3rd and 10th of the month:
First instalment will consist of interest for actual number of days

Note: Additional cess if any, will be applicable to all charges according to state law.

*Terms and conditions apply.

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Bajaj Finance Limited has the sole and absolute discretion, without assigning any reason to accept or reject any application. Terms and conditions apply*.