There are numerous legitimate lenders and services accessible for taking out a personal loan. Unfortunately, there are personal loan scams lurking in the shadows who would love nothing more than to take advantage of naive folks seeking financial assistance.
To help avoid future troubles or frustrations, it’s vital to be aware of and on the lookout for common warning signs of fraudsters.
Common Online Personal Loan Scams
Personal loan scams can be difficult to recognize because there are many different sorts of scams that target victims. The following are five prevalent types of loan scams:
The Lender Asks for Fees Upfront
A trustworthy lender would never charge you an upfront fee to obtain personal loan cash or to analyze personal loan paperwork. If a lender requests payment before you can access your loan funds, this is nearly always a symptom of a scam.
Before you Apply, the Lender Guarantees that You will be Approved.
Being guaranteed for a personal loan approval is another sign that a lender is looking to exploit you. In general, personal loan lenders have a few standards that applicants must follow in order to be approved for a personal loan.
For a lender to feel comfortable providing you with a personal loan. Your credit history, income, and many other indicators must match specified guidelines.
Scammers use emails or text messages to trick you into clicking on a link or opening an attachment and giving them your personal and financial information. “Never click on links in emails, social media posts, or text messages.”
If you actually want to apply for credit, go to a lender’s website and fill out an online application.
These services may charge cash-strapped customers a high upfront cost but subsequently fail to settle or negotiate their debts.
If the Lender is not Registered in Your State.
A lender that is not registered in your state cannot legally give you a personal loan. They must at least be registered in the states where they carry out their business. Check to be sure the lender is registered in the state where you live before accepting any of their loan offers.
The Lender Contacts You with An Offer.
A professional personal loan lender will not normally market their services by cold-calling consumers and giving them a loan offer on the spot. When a lender is first to contact you, this could be a clue that a scammer may be attempting to get access to your personal banking information.
Where to Report Personal Loan Scams
If you feel you were involved in a personal loan fraud or that a scammer attempted to target you. There are actions you can take to report the personal loan scam;
- Contact any companies implicated: If you gave money to the fraudster, don’t hesitate to contact any companies you interacted with to make the payment. Such as your bank or credit card provider. If possible, cancel any payments and ask for assistance in safeguarding your accounts.
- File a police report: You must also contact the police and file a report. It is critical to obtain a copy of the police report to maintain as proof of the incident.
- Keep an eye on your credit: it is recommended to sign up for credit monitoring to keep an eye out for any fraudulent activity.
- Prepare a report for the Federal Trade Commission (FTC): Report any suspected personal loan scams to the FTC to help stop the fraudster from affecting other customers in the future.
How to Discover Personal Loan Scams
Even if your credit is below average, numerous companies provide legitimate loans that you may be eligible for. The following are some actions to take when looking for a suitable lender;
- Examine the following for contact information: Even if a lender is only available online, its phone number, email address, and physical address should be easily accessible on the internet.
- Check out Internet reviews: Customers who provide reviews on Google and Yelp will have the most information about their lending experience.
- Make sure it’s registered: Before making loans, legitimate lenders must register with state regulators. If you are unsure whether a lender is safe, contact your state’s attorney general.
Guaranteed approvals unsolicited loan offers, lack of licensure, and advance payment demands are all signs of a personal loan scam. You should also avoid lenders who participate in such tactics at all costs.
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