How to Stay Safe from Personal Loan Scams and Frauds?

We have a number of needs in our everyday lives for which we may require financial help. For women, this can mean anything from paying for their child’s education to meeting an emergency healthcare expense. A Personal Loan is a common tool used to meet these unplanned/emergency needs, but unfortunately, as personal loans have become more popular the number of online loan application frauds has also increased. It’s important for women to exercise caution while taking a loan to avoid scams. Let’s look at some ways we can stay safe from personal loan frauds.

What is a Personal Loan Scam and how does it occur?

A Personal Loan Scam/online loan application fraud is any event where false information/promises are used to obtain money or private information from a borrower. It can have serious financial consequences. There can be many types of loan scams such as identity fraud, fake loan app fraud, loan renegotiation fraud, etc.

Here’s an example of how a loan scam may occur –

Congratulations Mrs. Geeta Sharma, you have been pre-approved for a personal loan of Rs. 1,00,000 by Company ABC. We request you to click on the link below and transfer Rs. 10,000 to avail this no-cost, interest-free loan today. Offer valid for 24 hours.

Red flags to Watch Out for to Avoid a Personal Loan Scam

1. Time Restriction –

Scamsters try to convince customers that an offer is only available for a limited time to create a sense of urgency among borrowers so that they don’t have time to research their claims.

2. Advance Payment –

If a caller tries to obtain an advance payment or an upfront fee before releasing the loan, it is highly likely that it is a fake loan scam.

3. Unusual Loan app/website –

An unsafe or suspicious app/website is a way to know if you’re dealing with a personal loan scam.

1. A genuine website will have a proper domain name as well as professional and grammatically correct content.
2. The website should have a lock sign in the right corner of the website URL and the URL should begin with ‘https’ not ‘http’.
3. The lender should have a listed website. Check the Company Identification Number (CIN) and details of the company’s registration.
4. The lender should be associated with a bank or non-banking financial company (NBFC).

4. No Background check –

While taking a loan documentation is required and genuine lenders will ask you for documentation before loan processing, it might vary from company to company but it is required such as your credit score, etc. If a lender promises to give you a loan without asking for your credit history, income details etc., it’s likely a fraud.

5. Extreme promises –

Always be suspicious when a lender makes extreme promises. Some examples can be offering a very low interest rate or promising loan approval with no documentation requirements.

Precautions you should take to stay safe from loan scams

You should confirm the office address of the lender

Fraudsters are known to give false contact information. Always verify if the lender has an office address. Your next step should be confirming if the given address is genuine or not.

You should properly check the lender’s website

Properly check the website of the lender, watch out for any unusual content, and read all the reviews provided by past borrowers.

You should research the claims made by the lender

Always do your own research on the proper process of releasing a loan as well as the current interest rate in the market.

You shouldn’t input your confidential data on a suspicious app/website

Be very careful before disclosing any personal information including your bank details, aadhaar or PAN details, contact information, passwords, etc. on an unsecure/ unregulated website.

You should read all the terms and conditions properly

Terms and conditions of a fake loan scam can include hidden charges. Read all documents carefully before proceeding.

You shouldn’t make any advance payment without a loan agreement

Genuine lenders do not charge any upfront payment until the loan is approved, be cautious and do not make any payment on the basis of a verbal discussion.

What to do in case you get trapped with a personal loan scam?

In the event that you get trapped in a personal loan scam, seek legal advice immediately. Register a complaint at your nearest police station or call a cyber-cell helpline. It’s important for women to have access to a secure financial environment so that they can feel safe while availing financial services.

Learn more about Do’s and Don’ts of Personal Loan

Each woman needs to be aware of the different tricks used by fraudsters and be cautious before providing any personal and sensitive information. Additionally, it is important to only take loans when you need it. Women should plan their spends in advance, save an ideal percentage of their income, and invest according to their goals. In case you end up taking a loan, you should pay your loans on time to ensure your credit score doesn’t get affected.

You can safely avail a personal loan with Lxme for all your emergency expenses with just 3 steps. Check your eligibility, select loan amount & tenure, upload KYC, verify your bank account, and money will be disbursed to your account!

Avail Personal Loan for Women, At Lxme 

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