The personal loan industry has grown by rapid strides over the past few years. However, people continue to fall into the trap of borrowing from unlicensed moneylenders. Consumers should always keep their guard up when searching for the best personal loans.
In this post, we show you the most common moneylending scams and, more importantly, how to avoid becoming a victim.
What do scammers want?
Before, there was usually one answer: money. However, scammers today have another target in mind besides money: your data.
Imagine if your wallet was stolen and the thieves just spent the cash inside. It would be a loss, yes, but an unfortunate event that most of us would easily manage.
On the other hand, what if they stole your credit card information, duplicated your bank cards, and even took out a massive loan using your personal data. This scenario presents a bigger risk today.
Different scams, same objective
Here are some of the most common signs that you may be dealing with a scammer instead of a legal moneylender. Most of them are based around convenience and speed, bait that lures borrowers with ease.
No credit check
Many legal lenders offer instant approval personal loans for low income applicants with no credit check. However, this is only provisional approval. Licensed lenders will follow up with a formal check before releasing any money to you.
An unlicensed lender will not. Their objective is to give you the money as soon as possible so you are indebted to them.
It may be tempting to jump at a loan that requires no paperwork. The best personal loans companies may have a very efficient process that minimises paperwork, but they will definitely have some. Only an illegal lender that does not want to leave any evidence behind will offer a completely document-free loan.
However, they will still take down your personal details so they can track you down to your home or workplace.
Fees are a part of any regular business, including money lending. A legal lender may charge you small fees to cover the cost of processing your loan application. What they will not do is ask for additional fees to release the funds, or request access to your bank account to take it themselves.
These types of scams are prevalent with personal loans for foreigners as scammers try to exploit their unfamiliarity with the rules.
They come to you
It certainly is convenient to have your meals and groceries delivered but that does not apply to loans. Licensed lenders are required to operate from a registered office and conduct business only on those premises. They are also not allowed to advertise on social media or offer loans to random people.
If you cannot find a lender’s address or have had them offer you loans unexpectedly over the phone, do not fall into the trap.
Pay now, win later
One popular scam is to offer victims extremely low interest rates on a business or personal loan. The condition is that the loan will be released only after the payment of massive upfront fees. Once the scammers receive this money, they disappear.
If the application fees seem excessive, you have a right not to proceed with the loan.
Every trustworthy website, financial or otherwise, will be encrypted. This is shown as a small padlock next to the URL, which will begin with ‘https’. (Unencrypted sites have a URL starting with ‘http’)
These scam sites urge you to share your personal or financial data, then use it to commit identity theft and financial fraud.
Beware of any lender that uses high-pressure tactics to get you to sign a loan contract. They could be unlicensed scammers or even unethical licensed lenders. Avoid both.
Knowledge is power
The scammer modus operandi is to target the vulnerable and anyone ignorant of the rules. They know which personal loans low income applicants want. They advertise personal loans for foreigners unaware of local laws. This is because they want easy targets.
Now that you have read this post and know what to look for and what to avoid, you are no longer as vulnerable. Still, always be on your guard when dealing with your financial and personal information. It is possible to obtain a low interest personal loan in 2021 without becoming a victim.