So you require a quick loan? It’s understandable, especially in today’s economy. But before you sign up for an online loan, be sure to do your research to avoid being scammed. Here are some tips on spotting and preventing online loans scams in 2022.
Depending on the scam, you could end up paying high-interest rates, excessive fees, or even losing your money. So it’s worth taking the time to educate yourself on what to look for before applying for personal loans. Keep reading for more information!
Common Signs Of Personal Loan Scams
There are many different forms of loan scams, but you can avoid becoming a victim of one by knowing what to look for.
1. Upfront Fees
One of the giant red flags for avoiding online payday loans is hidden fees. It’s never appropriate for an online lender to charge any upfront fees before allowing you access to funds, no matter how small the fee may seem initially.
Online lenders should only ask for money once they have actually approved and verified your application, which will usually happen after all documentation has been submitted via fax or email. Other examples of up-front fees include processing fees, preparation fees, account set-up fees, and credit report charges.
2. Phone Offer
Another sign of a possible payday loan scam is a phone offer. Many scammers may call you to let you know that they have received your application for a loan and need to verify some information before going through with the offer. If this happens, always remember to ask the caller which company they work for if you are not sure about whether or not it’s legitimate.
In addition, never give out personal information over the phone unless you’re certain that it’s OK to do so. Remember that once an up-front fee has been paid, there should be no other charges involved for everything to be completely legal and above board on your end too.
3. Wire Transfers
One of the most giant red flags in today’s online lending world is wire transfers. Wire transfers are when a lender sends you money via electronic wire transfer, which may seem similar to an ACH debit transfer. The problem with these types of transfers? If you’re not receiving funds directly into your bank account, there’s no way for you to verify that they’re legitimate!
Never accept a wire transfer if it seems suspicious or too good to be true. In addition, don’t ever give out your bank information over the phone unless you know that it’s going directly to a trusted source and not some random, unscrupulous lender.
4. Copycat Name
Another major sign of a loan scam is when you’re dealing with a very similar entity, if not precisely the same as another reputable company in your area. For example, many lenders will have names so similar to existing lenders or banks that you’ve heard of in the past that it’s almost impossible to even tell them apart when looking at an official website.
The problem with these types of websites is that they are usually absolute scams and prey on unsuspecting victims who don’t know any better. There’s nothing good about this business, no matter what their public relations team may say.
5. Personal Information
If you are given information about a lender to contact them or sign up for an account, never give out your details right away. These companies are not legitimate if they ask for this type of information before allowing access to the funds.
Only provide basic personal details when you have signed in to your account with that company because that will allow you to thoroughly review their terms and conditions while giving yourself time to think about whether or not it’s all above board.
Remember that any legitimate loan service should have nothing but good intentions in mind for their customers, so only supply them with primary data when necessary. Also, if someone doesn’t ask for a credit score and claim to provide loans with poor credit history, do run a thorough check on the credit broker before proceeding to get the loan early.
Also Check: Common Internet Scams To Be Aware Of
6. Red Flags
Many online payday loan sites seem like perfect opportunities until you look closely at their terms and conditions. These types of lenders will use fine print to limit the amount you can borrow, restrict access to your funds for days or weeks, charge extravagant fees, or any combination thereof to rip you off.
Please don’t sign up for anything that seems suspiciously cheap either because these companies are usually not legitimate since they’re trying to prey on people who don’t know any better! If something feels wrong about a lender, leave them behind.
How To Avoid Online Loan Scams?
Loan scams are common in the virtual world these days. While online loan sharks may appear to be bona fide lenders, they can be nothing more than scammers looking for their next victim. Here are some ways to avoid:
1. Do Thorough Research About The Company
One of the most important things you can do before doing business with an online company is researching them thoroughly. This can be done by checking forums, reviews, and other sources to see what previous customers have had to say about the service they received.
Also, make sure that the company is certified by the financial conduct authority and added on the financial services register for unsecured personal loans or debt consolidation loans.
2. Make Sure You Can Reach Someone If Problems Arise
Find out how you can contact the company in case of problems with your application or your loan status. For example, many scammers ask for money upfront and do not help when issues arise (for instance: asking for the impossible upon trying to get a refund). Although this is not necessarily true for all companies that offer loans online, it is better to be safe than sorry.
Many online companies will request bank account numbers and other personal data before verifying an applicant’s identity and providing a loan through their financial institution. If this is the case, be sure to check out what information you require to offer and see if it is something that you feel comfortable doing. Also, read up on what will happen to your private data once a transaction has been completed.
Be careful of what you click on, even if it looks like a fair deal. One quick email to verify an offer can turn into a nightmare! Never let your guard down when dealing with internet scams. Stay safe out there and be wise in all that you do online. Also, check for easy ways to avoid online scams for further help.
Maryam has been teaching IT as a school teacher for over a decade, and her main subject of choice is Internet safety, especially helping parents keep their families safe and secure online. When Maryam is not teaching or writing she is a big fan of the outdoors, the complete opposite of staring at a computer screen for hours.