Over the years, many people have fallen victim to personal loan scams. And, unfortunately, as the need for personal loans increases, so do scams
This is mainly because technology has made things easier for scammers to sound more legit and to get your personal information.
Sadly, these are the times we live in, so it’s crucial that you stay aware of common methods fraudsters practice when they’re looking for their next victim. So, before you apply for a loan online make sure you read the following tips.
How to identify a personal loan scam
Know how to qualify for a personal loan so you know what’s fake
When you’re about to apply for a personal loan, it’s vital that you know what to identify and how to qualify for a personal loan even before you fill in a loan application. Fraudsters prey on desperate individuals who don’t have enough knowledge of how financing works. So, it is always important to do a significant amount of research on how applications and loans work. Find out the following:
- What reputable financial institutions are there.
- What requirements do they want for a loan applicant?
- Know if the lender is registered and accredited with the National Credit Regulator (NCR). Make sure the lender has clear lending limits, clear practises, and customer service fees.
- Do not apply to a lender who needs an upfront payment before they give you a loan offer because that’s a red flag.
- Do they have a physical address?
- Is their website secure, does it look legit? Take note of how it works. There is a loan calculator, South African lenders have so that you can be able to see how much you’ll have to repay depending on the loan amount.
A lender who says they don’t do credit checks
Whenever you apply for a loan with a reputable dealer, they will always make a hard inquiry on your credit report. A hard inquiry is when a lender requests to see your credit information from the credit bureau.
This is done before you’re selected for financing. The lender will take a look at how you’ve been paying any previous loans, credit cards and store accounts. Of course, having a good credit score will improve your chances of getting financed.
But, if a lender tries to reel you in with a sales pitch about “no background checks needed” and that you can get approved immediately, then that’s a telltale sign. Because no lender will offer you a short or long term loan without seeing if you qualify and more importantly what kind of payer are you. Because then they would be the ones to lose money in the long run, as they’ll be selecting candidates that aren’t good payers.
Assured approval
No lender will approve a loan from the get-go. And, if you see a lender guaranteeing this, then you’ll know it is fake. In order for you to get pre-selected for any loan by a lender, lenders need to go through a number of requirements.
They’ll look at your credit score, delinquent and unpaid accounts, and how many recent credit applications you’ve made, and they’ll confirm employment and do an affordability check. Once they’ve gathered all the information and see that you’re a good candidate, only then will they inform you whether you’ve been successful or not. Guaranteed approval is too good to be true, and when it seems like that then it usually is. So, don’t fall for this.
Have misleading information
An accredited lender will always try and make all the information readily accessible to you. So, if you come across a lender who has vague and misleading information, there is a high possibility that you’re dealing with scammers. That being said, never get into a loan agreement that you’re unsure of. And, if you need a second opinion for a lender, ask a friend, family member to take a look at what they’re offering. Or, you can shop around on other lenders’ websites and see whether you’re getting similar or the same type of information. Yes, it won’t be the same, but you will notice the type of information available on accredited financial institutions.
Things to avoid
Don’t trust the caller ID
Because of technology, it’s easier for scammers to set up fake information like their caller ID. So, be careful and be aware of unknown numbers calling or sending you text messages approving you for a loan. Whenever an unknown number calls you offering you a loan, do not offer them any information over the phone, even if it’s a well-known credit provider.
If you are in search of a loan, the best alternative would be to look the lender up online, check to see if they’re accredited by the National Credit Regulator (NCR), then call them back and discuss things further.
Offering personal information
Once a scammer has made contact with you, they will ask for our personal information e.g. your full name, identity number, your monthly salary, financial status, your bank account details and employment details. This is something you should never give over the phone, especially if they called you. Just as mentioned in the previous tip, rather call them back and make an arrangement. And, try and use the number you found on Google rather than the one they called you with.
Never make an upfront payment
A common practice among fraudsters is to ask for an upfront payment after confirming approval. In some instances, the victim pays them a fee and then never hears from the “lenders” again. To avoid this, never by any means make an upfront payment because when applying for a loan, there shouldn’t be any upfront payments.
Often times, the scammer will then ask the victims to make additional payments in order for the upfront payment to go through. These are a few of the scammers required from their victims, and it’s always best to avoid anyone who asks for payment while you’re the one looking for a personal loan.
And, when you think about it, no lender will ask you to make a payment when you’re in need of money. So, whenever something sounds strange, take a step back and assess the situation.
Final thoughts
Applying for a loan is stressful because you’re in a tight spot and in need of money urgently. But, don’t let your impatience and hastiness allow you to fall victim to scammers. Yes, scammers are everywhere nowadays, but as much as technology has given scammers the ability to scam people, it has also given people the right tools to find out whether they’re being scammed or not. So, all in all, be vigilant and don’t trust people on the internet or over the phone. If you’re not sure, you can always go to the nearest branch and get all the necessary information. And remember that there is a financial institution who is willing to help you. So, don’t let scammers ruin your chances of bettering your future.
