According to data released by the Federal Trade Commission, consumers suffered losses of over $5.8 billion in 2021 as a result of fraud.
People in need and those likely to accept fake offers are the most likely targets for fraudsters. A personal loan scam could lead to you losing money if you’re not careful.
This is the reason that you need to always consider the best personal loans like Zippy loan, CashUSA, Red arrow loans, SoFi, etc.
Checking the legitimacy of a loan company can help you avoid being scammed. Loan scams are usually characterized by the following signs.
The Lender Guarantees Approval:
Credit reports from all three major credit bureaus are sometimes requested by truly reputable lenders. Usually, lenders want to know if you’ve been diligent about repaying your loans on time and in full in the past.
Your creditworthiness is not the main concern of Fraudulent businesses. It is common for these companies to target high-risk borrowers with a history of defaulting on loan payments and incurring excessive late fees and penalties.
Bad credit loans are available from some reputable lenders. When determining your eligibility, these lenders look beyond your credit score. You will, however, need to provide your income, employment information, and educational background before these lenders will consider your application.
The Lender Isn’t Registered In Your State
Loan brokers and lenders have to register themselves in that specific state where they are doing their business. So always check the profile of your particular selected lender and see if they are legally registered in your state or not.
If your lender is not legally registered then I m pretty sure that you are dealing with a loan scammer.
Checking if the lender is legally registered or not is the easiest and the basic step that will tell you if you are dealing with a reputable lender or not.
The Lender Demands a Prepaid Card or another Payment Upfront
It has been reported that some scammers ask for prepaid debit cards, gift cards, or bank account information from borrowers. These scammers generally claim that their information is needed for insurance purposes, collateral, or fees.
A scam has been perpetrated here. Your loan is deducted from the amount you pay for your application, appraisal, and credit report if you apply with a legitimate financial institution.
The card which is prepaid is a big no. Having given it to a lender makes it virtually impossible to trace, and it can’t be reported as stolen.
The bank or credit union can investigate your claim if you provide your banking credentials, but it could take some time. It is also possible that you will not be able to recover the funds stolen.
The Lender Calls Writes or Knocks
You need to be very aware when you get loan offers on mobile phones, e-mails, or through a door-to-door solicitation because as the FTC orders it is totally illegal for every type of company and lender to offer any loan on phones in the U.S.
The Telemarketing Sales Rule violates this. Email advertisements sent by lenders are not illegal, however.
It is not uncommon for scammers to use the name of a legitimate lender to steal from consumers. The FTC notes that scammers are also known for swapping out names and numbers on your caller ID to fool you into believing they’re real.
The Lender has No Physical Address
Keep in mind that the physical address or location of your lender is a must. Make sure you verify it on google maps. A personal loan scammer might list an address that is actually a vacant lot, so it is important to verify the address.
Don’t do business with a lender who doesn’t have a physical address. It is common for fraudsters to operate in an untraceable manner in order to avoid legal repercussions.
So these are the 5 top ways that will help you in spotting personal loan scams. I hope that this article is helpful for you and you learned something great from it.