Warning Signs Of Personal Loan Scams You Need To Know About

When there is a desperate need, it may call for desperate measures. However, those desperate measures are made up of many possible mistakes and cautions. While applying for a loan, these mistakes can be dangerous if not identified in the first place. Therefore, it is important to identify the red flags first.

If you are looking for a personal loan but have a bad credit score, you are even more vulnerable to a loan scam. If you have still got the perfectly fitting loan, there are chances of it being a scam. Therefore, it becomes very important to identify any credit offer as legitimate before applying. Use this article to measure that offer on the parameters of possible warning signs.

Signs of a personal loan scam

  1. “Credit score not required.”

The guarantee to repay any debt comes from your credit score. A high score means that you repay your debts punctually. Any lender, if legitimate, will ask for your credit score. If they are not seeking your credit score or history, beware. They simply do not care about getting their money back since there would not be any amount lent in the first place. These scammers are determined to extract your personal information by giving you the delusion of a ‘perfect’ loan.

  1. Unregistered lender

It is required by the state for any lender to register himself/herself for a license. If the business is registered in some other state but not yours, it is still a warning sign. This might be a fraudulent website using a business’s name to make money or extract personal information. Do not respond to their lending inquiries unless you have seen their legitimate linens of your state.

  1. Loan offer looks incomplete

According to the Lending Act, all lenders are required to provide complete terms of a loan, which includes the final cost of the principal plus interest. Before you sign the dotted line, read everything very carefully. If the offer lacks any details, contains spelling or grammar errors, or otherwise seems fishy, it could possibly be a scam.

  1. Physical absence

Most of these scammers fail to provide a physical address on their websites or other portals. If so, stop the loan right now! These fraudulent websites do not wish to leave any trail behind. Therefore, they do not disclose any contact related information. If a lender does not have a physical space or office, chances of their legitimacy decrease exponentially.

  1. ENDING SOON, APPLY NOW!

If the offer posed to you is an “urgent offer,” “special offer only for you,” or a “limited offer,” it is most definitely a scam. If it is an offer for YOU, it must be based on YOUR credit score. Legitimate lenders will provide steady rates depending on your credit. These specially articulated pressure tricks are made to drive you to act quickly, even before you are able to spot a scam.

  1. Up-front payment required

If a loan requires an origination, processing fee, or even an insurance fee before approval, it is most likely a scam. Any lender asking for payment prior to approval is just a scammer looking for quick money. Be aware of the rules and do not make any up-front payment to any lender, whether legitimate or not.

  1. 100% Guaranteed Loan.”

A “guaranteed loan” is a scam in itself. There is no such thing as a guaranteed loan at all. A lender must look at your credit history or credit score to approve your loan application. This is a detailed checking process wherein every credit-related information will be verified. These fraudulent entities use this approval guarantee to attract borrowers to earn upfront fees.

  1. Pay with a gift card.”

A gift card? To a lender? Of course, it sounds fishy, simply because it is. A gift card payment is no different from cash payment. Once the money is spent, it is hard to retrieve it. If the lender is legal, they will never ask you to pay with a gift card. If they are legal yet ask for a gift card payment, chances are it is still a fraud. It becomes hard to prove that you gave into a scam if the amount is a mere gift card.

Always look out for red flags and trust your intuition. Do proper research, verify every information, and read every document very carefully. It is easier to prevent a scam than it is to revive from one. Have a safe borrowing!

Summary: 

It is crucial to look for red flags whilst applying for a loan. Absence of major factors that make up a legit loan like credit score, no upfront fees, no approval guarantee make up the recipe for a fraudulent loan. 

Below are some of the signs of a personal loan scam:

A “guaranteed loan” is a scam in itself. There is no such thing as a guaranteed loan at all. A lender must look at your credit history or credit score to approve your loan application. 

A gift card? To a lender? Of course, it sounds fishy, simply because it is. A gift card payment is no different from cash payment. Once the money is spent, it is hard to retrieve it.

If a loan requires an origination, processing fee, or even an insurance fee before approval, it is most likely a scam. Any lender asking for payment prior to approval is just a scammer looking for quick money.

Always look out for red flags and trust your intuition. Do proper research, verify every information, and read every document very carefully.