How to Spot Personal Loan Scams: India 2023
Are you considering taking out a personal loan? It’s important to be aware of the potential for scams in this area. Unfortunately, there are plenty of unscrupulous individuals and organizations looking to take advantage of those seeking financial assistance. In this blog post, we’ll explore some key ways you can spot personal loan scams and protect yourself from falling victim to them. So read on and stay safe!
9 ways to spot personal loan frauds in India
Application Scams are the most common type of loan fraud. It occurs when a potential borrower provides false information about a payday loan. Borrowers attempt to deceive lenders in a variety of ways by providing misappropriated or misleading information on their loan applications.
In this case, the candidate may use someone else’s identity to obtain a loan. If a solid KYC is not in place, the scam artist can easily escape with money. This includes PAN verification, voter ID verification, Aadhar number verification, and confirmation of other parameters.
The scammer may also exaggerate a victim’s earnings or personal assets. Individuals who provide false references or employers may also be fraudsters. These types of fraud usually involve a helper who acts as a reference or employer for the fraudster.
Demanding Payment in Advance
Money can be needed at any time, and when people are stressed, they will do anything to get it.
On the other hand, fraudsters see this as an opportunity to commit a personal loan scam or an online loan fraud case. Fake lending apps demand upfront fees with the promise of immediate funds disbursement whether or not your application is completed.
Application for a Guaranteed Loan
Genuine, reputable lenders make it clear that they will need to check your credit. Most lenders want to know if you have a history of repaying your loans on time and in full to ensure that you will be responsible with debt repayment.
Businesses that are deceptive are unconcerned about your financial health. They are typically looking for high-risk borrowers, many of whom are almost certain to default on loans and face exorbitant late charges and fees.
Also read: Top 10 personal loans in India.
There is no disclosure of charges and costs.
Examining the loan fees associated with the loan can assist you in identifying a commercial loan scam and preventing yourself from functioning on false loan approval messages. Con artists never reveal the fees associated with the loan.
Even if you carefully browse their website, you will not find any information on their costs and fees.
There is no physical address for the lender.
Each lender you’re thinking about should have a physical address. It’s critical to double-check this because some personal loan scammers may mention locations that are already legitimately vacant homes.
Stay away from lenders who do not appear to have a physical address. Many deceptive businesses are difficult to find, allowing them to avoid prosecution.
Time-limited promotions or limited-time schemes
A loan offered to a client is typically a standing offer that lasts for a longer period of time than a few days or hours. When the loan provider or customer service representative puts pressure on you to choose the loan within a certain time frame, the transaction is more likely to be a personal loan scam.
Communication that occurs on its own
People in desperate financial need receive calls, emails, and texts from fraudulent lenders claiming to have loans available immediately. Those emails and messages may lead you to believe that you are guaranteed a loan without meeting any requirements or having your credit score checked.
These lenders are usually interested in your personal information. Please do not fall for their ruses.
It appears to be fictitious
A personal loan offer is likely to be false if it appears extremely appealing in comparison to reality. Genuine lenders will not call you at random and make you an enticing loan offer.
You are unlikely to be approved for a loan with an absurdly low interest rate unless you fill out an application and allow a hard credit pull.
The lender does not have a license in your state
Verify the list of countries where the lender is permitted to do business on the lender’s website. If the lender you’re dealing with does not identify registered states, you may be dealing with a loan scam.
Verifying registration is an important step to ensure you’re doing business with a legitimate brand and distinguishing scams from legitimate businesses.
The Bottom line
People who are unable to obtain financing through traditional channels are victims of fraud. These con artists target debt-ridden borrowers, the elderly and physically disabled, as well as people with little or no credit history.
However, we hope that by employing all of the aforementioned strategies, you will be able to prevent a number of loan frauds in India.
Also read: 6 Reasons for personal loan rejection.
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