Top Personal Loan Scams
Personal loan scams hit where it hurts the most. Families that face an exigency or those who struggle to make ends meet are emotionally and psychologically vulnerable. They can fall prey to scammers who look to cash in. Being aware of such loan frauds can help you to avoid falling for them.
4 Common Personal Loan Frauds in India Used by Cyber Criminals in 2019
1.Advance Pay to Get a Loan
Imagine you’ve visited various credit lenders and got rejected everywhere. But you desperately need some credit to meet an urgent expenditure. While worrying about it, you stumble upon the phone number of a loan broker.
You decide to take your chance, so you call him, you explain to him your situation, he understands your predicament and promises to use his influence to get you a loan.
He sits with you and gets all the paperwork done and assures you that your loan has been approved by a third party. All you need to do is to pay a small processing fee before you actually receive the money.
You are desperate for the loan, so you make the payment and wait for your now-approved loan. You never get the fund and also the money you paid to the broker. End of story.
Fake Lender: A fake lender will demand you to pay upfront costs like processing fees in cash before they process the loan application.
Legit Lender: A legitimate lender’s loan application process is transparent. To process a loan application there are certain fees applied like the processing fee, origination fee, etc. and these fees are agreed upon in the loan agreement. The fee amount is typically deducted from your total loan amount and not taken upfront.
2. Online Phishing Scam
You can opt for a credit or personal loan online and the process is also easy. All you have to do is follow the instructions given in the email you receive almost every day. Just click on that link provided in your email and get redirected to a website.
There is every chance that the website you got directed to doesn’t look suspicious. So, you provide your details and you are promised of an approval.
You may not get the credit but here’s what can happen to you!
After waiting for couple of days after applying, you decide to check on the status of your loan application. You start panicking because the website has disappeared from the web!
And then you receive a message that asks you to pay the instalment against the credit – a dime of which you never saw. If you have already experienced this, you have been a victim of online phishing fraud.
Fake Lender: A fake lender may use your personal details for opening fake credit accounts in your name or sell the same to financiers for a good commission.
Legit Lender: A legit lender’s online loan application page will be encrypted. The padlock to the left of the page’s URL will start with “https.” This is an indication that it is a secure site.
This is how it looks:
If you don’t see this, you are probably not on a secure site.
3. Guaranteed Loan Approval Scam
Guaranteed loan approval sounds like a dream come true, especially when you are in dire need of cash. Without realizing that it could be a scam, you get dragged because of what is promised – Guaranteed Loan Approval – only to find out later that you have been duped.
Fake Lender: Personal loan scammers lure you in with guaranteed approval so they can demand fraudulent upfront fees.
Legit Lender: There’s no such thing as guaranteed loan approval. Legit lenders will do a credit check and review your financial stability before they approve the loan.
4. Unsolicited Communication Scam
You receive unsolicited emails and calls saying that your personal loan offer is going to expire soon. You need the money and the pressure to act immediately gets to you.
Fake Lender: A fake lender will pressurise you to act immediately in an attempt to extract your confidential information or money.
Legit Lender: A legit lender will never guarantee a loan approval without obtaining your credit score and verifying your information.
How Else Can You Protect Yourself From Personal Loan Frauds?
- Your Credit Report: There is no way you can get yourself a personal loan approved without a prior credit score. Your credit score shows how well you have been able to repay your loans.
If a lender claims that they don’t need your credit score, then it’s too good to be true.
- Unsecured Website: If there’s no ‘https’ at the beginning of the site address, please close that window at that very instant. That is a sign of the owner being up to something illegal.
Also, remember to not override any warning that says a site’s security certificate has expired. Pay attention to the URLs you click on.
- Credit Lender’s Address: The lender needs to have a proper mailing address of the place he operates from. If the ‘credit’ lender’s website doesn’t show a physical address, please turn the other way.
Even if there is an address mentioned, it doesn’t necessarily have to be real so what you can do is either check the address using ‘Google Maps’ or look it up on a web directory or do both.
- Limited Period Offers: Beware those emails or text messages that you receive from legit-looking senders. They will give you deadlines and ask you to act in a hurry to get the lowest interest rates on a range of ‘personal loan’ products, tailor-made for you.
- Improperly Disclosed Fee: If your lender or broker isn’t disclosing the complete details of the application, appraisal, or credit report fees, turn them down immediately.
- Your Details Are for Sale: To be brutally honest, it is possible that the website which claims to be a lender’s website isn’t a lender’s website after all. Such websites act as loan aggregators.
Those guys sell your name, address, Aadhaar card number, PAN and all information that you may have entered or might enter in the future, to online bidders.Those bidders could be hackers who would use that information against you and carry the potential to empty your bank account, to say the least.
Why Should You Trust MoneyTap for Personal Loan Online?
- Every feature of MoneyTap is designed leveraging the latest technology for a smooth and secure transaction.
- Through MoneyTap app you get connected with partner banks to get the loan.
- Your personal details will only be used with your consent for the loan product or service you applied for.
- Our backend APIs meet the mandated security standards and robust security protocols.
- Our security systems have been tested and certified by our partner banks’ IT team.
Personal loan scammers invest a lot of time and effort to make their scams look real so that they gain your trust. Differentiating the fake from the real is difficult, so the best you can do is never let your guard down, be aware of such loan scams and apply for a loan with credible lenders.