7 Tips To Identify And Avoid A Personal Loan Scam
According to the Federal Trade Commission a massive total of $1.48 billion was lost by consumers due to fraudulent mortgage practices. Medical bill payment, debt consolidation and other similar services offer enticing personal loan options that actually attract many innocent consumers who later learn that the lender was actually a fraud.
In a market that is full of such scammers, how will you protect yourself from such frauds? How will you check if the loan lending company is actually legitimate? Well, here are some common signs that will help you identify a potential loan scam.
7 Signs To Identify A Loan Scam
1. The lender overlooks your previous payment history
One of the first requirements that most lenders put forth is their need to check your previous credit history before they lend you any amount of money.
Even the most reputable lenders make it a point with the borrower that they will need to check your credit, by simply getting all the necessary reports from all three major credit companies such as, Equifax, Experian and TransUnion). They follow this procedure to check whether you had any history of paying back bills in full and on time. This will only assure these lenders to trust you understand that you will definitely repay the loan in time.
However on the other hand, the scam lenders will just overlook your history and will have absolutely no interest to know whether or not you paid all your bills in time. In fact, they will do the exact opposite, looking for high-risk borrowers who will definitely have problems repaying the loans and will fail to pay the loan in time which will again make them suffer from penalties and late fees.
2. The lender is not registered in your state
According to the Federal Trade Commission (FTC) both, lenders as well as the loan brokers should be registered in the state where they conduct business. In case the lender who has caught your attention with their interesting offers is not listed in any of the states, it simply means that you might probably be dealing with a loan scam.
Thus, make sure that you check the lender’s website and verify their list of states where they are registered or legally conduct mortgage business. However, if you fail to find any such details, contact the state attorney general’s headquarters for verification. Remember that a lender also operates with the help of a bank, so make sure to check for their bank details as well on their website.
3. The Lender Demands For A Prepaid Debit Card
Does your lender ask for your prepaid debit card for the purpose of insurance, fees or as collateral? If yes, make sure that you stay away from such scam or fraudulent lenders. A legal mortgage institution will charge you a fee for your application, credit report or appraisal, but will deduct these charges form your loan amount.
A prepaid debit card is considered as the most useful tool for personal loan scams. The transaction is virtually untraceable and if you have given up your card voluntarily to the lenders, then there is very little that can be done by the legal department.
4. The Lender Calls, Writes Or Even Knocks At Your Door Offering A Loan
All legal lenders advertise their services and offers to borrowers like you on social media platforms or online. But, if you get an online offer by phone or through email or in the rarest conditions, a door-to-door advertisement, then make sure that you keep yourself guarded. According to FTC, it is considered illegal in U.S to offer loans via phone.
5. The Lender’s Website Is Not Secured
Before you finalise a lender company, make sure that you visit the lender’s website. Make sure that you check almost everything that you can possibly see and understand.
– Check for a padlock symbol on the pages of the website, especially when you are asked to provide with your personal information.
– Check the website’s address and see if there is an ‘s’ at the end of “http”. The ‘s’ here stands for secured. Thus if the address shows, https://. Then it means that the website is secured.
The padlock symbol combined with the secure address symbol, both indicate that the website is well protected from fraudsters who might steal your personal data and sell it to criminals.
The lack of these safety and security measures indicates that the lender is not genuine or is not concerned about the safety of his website. Accepting an offer from such a lender might just leave your information being exposed to the wrong people.
6. The Lender Has No Physical Office Or Address
Does your lender have a physical office or location that you can check? Well, ask for your lender’s physical location and simply plug it to your Google Maps. In certain cases, lenders who are running a personal loan scam list addresses that are wrong or actually vacant locations.
So, if you do not find a genuine physical address for your lender, it is best suggested that you avoid the lender completely. There are many personal loan scam companies that stay untraceable in order to avoid legal complications in their scams.
7. The Lender Pressures You Constantly To Take A Decision Immediately
If you are in a hurry to get a mortgage loan, you can start checking more lenders in urgency. However, if there is no urgency, then it is best that you take your time to check and choose the best lender for you who suits all your criteria. Never fall prey to lenders who pressurize you to take their mortgage loans.
How To Identify A Good And Legitimate Lender?
A legally genuine lender will offer your several clues, letting you know where and what to look for. Here are some signs that indicate a genuine lender to you.
• Easy to approach
Check the physical address, email address, telephone number of the lender’s website and office. Also check if the website has an online chat feature to help its customers. The lender should be easy to reach and also have a good online presence along with a good established business.
• Offers Good customer service
Check the services offered by the lender company. Make sure that their staff is trained efficiently to help the customers and also maintain the reputation of the lender. It is also important that the lender can answer all the questions thrown to him by the borrowers.
• Takes interest in your credit history
Make sure that the lender’s company takes complete interest in checking your background before they lend you money. Even though these companies advertise that they offer loans to borrowers with poor credit record, they will still check your credit record and only then base the loan on these findings.
• Check their reviews
Read all the available reviews online about the lender companies. Check the Google Reviews, Better Business Bureau reviews and the reviews of the other reviewing websites. If you see users posting negative reviews for a long time, then make sure that you stay away from such companies.
• Complete the term loans
A good and legitimate lender will carefully check all the loan terms with you and also send these terms in writing to you. This way, they will sure that all the terms are clear for both parties.
• Requires no upfront payment
Any legal mortgage company will never ask you to make an upfront payment in the form of cash or gift cards. If a lender company asks you such favors, be aware from the company as it may be a scammer.
What Action Will You Take If You Think You Have Been Scammed?
Well, no one would really want to get scammed by such fraudulent lenders. But, sadly there are many cases registered each year for such scams. If you become a victim of such scams, the first thing that you should do is try and stay calm. Take a minute to realize the fraud and then start investigating.
1. Make a file of all the related documents that you have. If you have any emails, documents, or screenshots of your conversation, gather them all and organize it properly to show them to the official authorities.
2. Contact or visit your local law enforcement officials. File a police report for the scam to make an official record of the forgery.
3. Contact the state higher law enforcement officials such as FBI, FTC, Better Business Bureau and also the attorney general’s office to register about this scam. This will help the officials to protect other consumers from such scams.
4. Spread the word out. Talk about this scam with your friends and family members. This will only make them more alert about such scams and stop them from falling prey to such cases. There are innumerable such official sounding and looking loan scams that are ready to find their next prey.
Choose On Reputable Lenders
Now that you know about loan scams, make sure that you check all the available details about a lender company. If you are looking for personal loan, make sure that you check with our trusted lending partners. At Top Fundings, you can get pre-qualified for a loan of $40,000 easily, without affecting your credit score. We understand the importance of your personal data and hence, we make sure that all your information is kept secured with us, and never share it with other companies.
