Digital advancements bring significant benefits to the financial industry, but they also bring forth challenges. The anonymity provided by the internet enables individuals to conceal their identities. So, fraudsters misuse this to engage in hacking activities and impersonate reputable companies to deceive others. Consequently, personal loan scams in India have become increasingly common. However, with careful scrutiny and increased awareness, it is possible to prevent falling victim to these scams.
What are Personal Loan Scams?
Personal loan scams are deceptive schemes used by fraudsters to either gather your personal information or obtain money from you. These scams often include promises of loans without conducting credit checks, or they may involve unrequested loan offers. It is followed by the collection of upfront fees or collateral, after which the scammer disappears.
Detecting a Personal Loan Scam
Personal loan scams are unfortunately quite prevalent, but fortunately, there are methods to identify them before falling victim. Many loan scams share common traits. You can protect yourself by recognising them when looking out for personal loans. Here are some warning signs to be aware of.
Direct Contact from the Lender
Typically, reputable lenders do not make unsolicited contact with potential borrowers unless the individuals have recently submitted loan applications, leading to prescreened calls based on their credit history. In contrast, personal loan scammers frequently initiate contact via phone, email, or face-to-face interactions, often requesting personal information to gain access to victims’ bank accounts. In essence, receiving loan offers without making any personal loan apply online, is likely a scam.
Guaranteed Loan Approval
Any loan advertisement claiming ‘loan approval guaranteed’ should be approached with caution. In reality, there is no such thing as a guaranteed loan. Loan approval hinges on multiple factors, including your credit history and the verification of your provided information.
Exercise caution when browsing websites for loans. If a lender’s website lacks the ‘s’ after ‘http,’ it’s a red flag, and you should immediately cease using such sites. The absence of ‘s’ indicates that the website is not secure and could be a potential scam. Providing your personal information, including your bank account number and password, to such a website could lead to misuse.
Many fraudulent personal loan websites mimic the official sites of banks and other financial institutions. Therefore, it’s crucial always to doublecheck the website’s address for authenticity.
Upfront Fees Demand
Processing costs are subtracted by lenders from the loan amount released. If a loan lender requests upfront loan processing fees, that is a major red sign. Before completing a loan transaction, no financial institution ever requires borrowers to make any advance payments or deposits.
No Credit Verifications or Checks
Personal loans are often approved by reputable banks and lenders following a review of your credit history, income documentation, CIBIL score, and Income Tax (IT) return. It’s a major warning sign if a lender promises you that there are no such requirements. To assess interest rates, lenders will always ask for documentation like past financial records and other records.
Preventing Personal Loan Fraud
To avoid falling victim to personal loan fraud, borrowers can take the following precautions:
Investigate the Lender
Conducting a thorough investigation of the lender is one of the most effective ways to prevent fraud. Check if the lender is accredited by regulatory bodies such as the Reserve Bank of India. Confirm the lender’s contact information. Search for testimonials and complaints from past customers. Visit the lender’s official website to understand loan options, fees, and interest rates better.
Verify Loan Documentation
Carefully reviewing loan documents is a crucial step in fraud prevention. Borrowers should:
Scrutinise loan agreements before signing, ensuring all terms and conditions are transparent and comprehensible. Pay close attention to details in the loan agreement, including interest rates, repayment plans, costs, and other specifics. Seek clarification from the lender or consult legal advice if any part of the agreement is unclear or confusing.
Send Grievances to the Appropriate Authorities
Report the scam to the consumer protection authorities. In order to report your encounter with the fraud, reach out to the police in your area. They will be able to file a formal report and take all necessary actions to stop the fraudster from operating in your neighbourhood in the future.
Safeguard Personal Information
Refrain from disclosing your financial or personal details unless you are certain about the legitimacy of the lender. While applying for an instant cash loan, thoroughly verify the lender’s credibility and the information they have presented. Furnish only essential information and abstain from sharing superfluous details.
Although digitalisation has transformed the lending industry, it is important to stay aware and on guard against numerous personal loan scams. You may defend yourself from falling victim to fraudulent operations by being aware of the types of scams and adopting precautions. Always research lenders, verify their reliability and secure your financial and personal information. You can make sure that your borrowing experience is secure and safe by using the precautions mentioned above. Get loans from trusted lenders only. Go with renowned firms like Fibe, which provides a transparent loan application process.