How to Determine if a Loan is a Scam

Whether you need money for home improvements, buying a new car, or to start a business, there will be hundreds of financial institutions willing to grant you a loan. That said, wherever there’s money to be made, you’ll most likely encounter conmen and profiteers, too. With our growing reliance on credit, nowadays, loan scams have become incredibly commonplace. These advertise themselves as legitimate opportunities with attractive rates and a facilitated approval process, often targeting people with poor credit. Now, to prevent massive financial losses on your end, here’s a comprehensive guide to help you determine if and when a loan is fraudulent.

No Credit Check

One of the clearest telltale signs of a loan scam is when the provider does not express any interest in finding out more about your personal history. Naturally, a lender must ensure that the borrower has an adequate profile and enough resources to repay the loan fully and in due time. This shouldn’t be confused with bad credit loans; here, scammers typically fail to ask for any employment information, proof of income, bank statement, or any sorts of documents.

No Official Certification

While a quick internet search will point you towards countless lenders, it’s imperative to be thorough and ensure that the financial organism you choose bears some form of business authentication. As the UK-based money experts at Lucky Loans point out, this helps ensure that the lender operates in all legality and complies with industry regulations. By contrast, a fraudulent lender will showcase no official reference or certification on their website, leaving little doubt as to the trustworthiness of their operations (or as it happens, lack thereof).

Door-to-Door, Cold Calling, Email Marketing

Aside from online ads and appearances on mass media, financial lenders will never go out of their way to offer you their services. They trust that you’ll know where to find them should you be needing a loan, especially reputable ventures. On the other hand, scammers utilize every possible channel to solicit potential victims and promote their deceitful services. So, always beware of someone who knocks on your door, calls your home or cell phone, or sends you a broadcasted email.

No Physical Address

Legitimate lenders will always provide a business location to their customers. Not only is this a legal obligation (business registration, tax purposes), but it reassures the borrower that there is a place they can visit for inquiries, follow-ups, or complaints. However, conmen make sure not to leave behind any trails that could lead to and expose them. It’s best to steer clear of these “ghost” lenders, even if they operate solely online.

Unsecure Website

Speaking of which, no matter the nature of the provided service, companies must ensure that their websites are well-secured to inspire integrity and trust. Throughout your search for a qualified lender, make sure that the pages you land on always begin with “https” and not just “Http,” an important factor that guarantees protection from hackers and personal information theft. A good browser can effectively help identify such threats before it’s too late.

“Guaranteed” Loan Approval

By all means, stay away from providers who ensure a “guaranteed, quick, and painless” loan approval process. This is typically the kind of selling argument fraudsters use to lure in their victims and extort them. The premise of a guaranteed loan is absurd and only denotes the unprofessionalism and duplicity of the supposed lenders. Normally, a qualified lender takes the time to review your information, level of income, and debt, as well as credit history to establish your solvency.

Dubious Payment Method

This is yet another classic characteristic of fraudulent loans. Here, lenders often ask potential borrowers to provide a prepaid debit or credit card number for processing fees, insurance matters, collateral, or other not-so-clever lies. This protects scammers from traceability and lost or stolen card reports. A legitimate lending organism will deduct such fees directly from your loan, and under no circumstance require a prepaid payment method.

Pressure and Urgency

Generally speaking, it isn’t in a conman’s interest to give you a lot of time to think things over; they encourage and urge their potential victims to act immediately and “seal the deal.” While trusted lenders may impose a deadline for agreeing to a loan, it will generally be a matter of weeks, not days. So, don’t ever let yourself give in to pressure or a false sense of urgency.

With ever more sophisticated methods, scammers continue to extort millions of dollars out of unsuspecting victims every year. If you notice at least two or more of these aforementioned clues, you’re most likely dealing with organized fraudsters. Lastly, if you’ve fallen victim and lost money to a suspicious loan scheme, don’t wait to contact your local authorities and insurer with as much evidence and documentation as possible. While the chances of recovering your money are often slim, it should fall upon every victim to denounce the perpetrators and press charges if need be.

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