How To Avoid Personal Loan Scams – Personal loans are important, especially when you need to sort out some financial emergencies. But you need to be careful when you are taking out a personal loan so that you do not get scammed. A personal loan scam is one way for fraudsters to obtain your Social Security number or collect fees without lending you your desired amount of money.
Hence, if you want to take out a personal loan for anything, you want to consolidate a debt. Or refinance a home improvement, stock up the house with groceries. It is essential to make sure the lender you are trying to borrow money from is not a scam. While it can be difficult to detect if the lender is a scam, there are ways you can find out the authenticity of the lender.
What Are Personal Loan Scams?
Personal loan scams are loans that are given under pretenses. Loan scammers use fake company logos, false caller IDs, and other tricks to impersonate legitimate agencies to gain the trust of the borrower. The scammer often sweet-talks their target by making a big promise to them that they know they cannot deliver on. They also hide the actual cost of the loan from the lender.
Common Personal Loan Scams
There are common personal loan scams that you should look out for, and they include:
This is a common personal loan scam where the lender will charge cash-strapped consumers an upfront fee, but they will fail to settle or negotiate their debts.
Phishing is another common loan scam that you should take note of. These fraudsters will 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. When you see this type of email or text message, always ignore them and never click on links within emails, text messages, or social media posts.
You will know if the personal loan is a scam if the lender charges an upfront fee for a loan that never takes place.
How To Spot a Personal Loan Scam
There are ways to detect a personal loan scam. However, you need to be very smart and observant. Here are six ways to spot a personal loan scam.
The Website isn’t Secured
Once you notice that the website of the lender isn’t secured, then it is a scam. Most of these scammers are in the habit of creating fake websites that look similar to the websites of legitimate companies. Once you enter your information on a scam website, all your bank information, your identity, and even your money will be stolen.
The Lender’s Email Address is Fishy
If the scammer’s email address does not match the company’s website, then it is not authentic. Employees of legitimate companies will not send you emails from their email addresses. This is most likely what a scammer will do.
You Feel Pressured
Once you start to feel pressured, just know that there is something fishy going on. Taking out a personal loan is a very big decision, and you should not be pressured to take out a personal loan. Do not fall for an urgent offer because those offers can be strategies to force you into taking a loan.
The Lender Asks For a Prepaid Debit Card or Unusual Form of Payment
If you are asked to send money on a gift card like an Amazon gift card, through Western Union, a prepaid debit card like a Green Dot card, etc., just know that the person is a scam. Legitimate lenders might also have their reason to charge you a fee, but these charges can be deducted from your loan.
Upfront Fee in Exchange for Guaranteed Approval
Do not pay any upfront fee just to get guaranteed approval. This is one of the most common personal loan scams, and you should be careful so that you don’t fall victim. Once you make the upfront payment, the scammer will keep the fee and disappear.
No Credit Check is Required
Any lender that promises to give you a loan without checking your credit score is a scam. Legit lenders will always check your credit score to determine if you will be able to repay the loan.
How Can I Avoid Personal Loan Scams?
You can avoid personal loan scams, and these are the things you should not do when you are confronted with a personal loan scammer. Firstly, check if the Website of the Lender is Secure. You can do this by looking for ‘’https’’ at the start of the website address. Or better yet, look for a padlock icon to the left of the website address. If the website has this, then it has been certified as secure.
Moreso, check the From address on any email you receive and ensure it matches the company’s website. Also, if you receive any email from a personal account like Comcast, Yahoo, or AOL, you should not reply to such emails. In addition, take the time to do thorough research on the potential lender. Ensure they look legitimate, and don’t forget to review their website to check out trusted third-party reviews such as Better Business Bureau.
Also, delete your email or hang up the phone if a lender asks you for any unusual form of payment. You can also visit the company’s website to look for written information about typical fees and acceptable forms of payment. In addition, never pay an upfront fee for the promise of a loan. You can also visit the company’s website to look for any information about fees. Finally, review the lender’s website to understand all the application requirements. If all the information on the website sounds too good to be true, then it probably is a scam.
Personal loan scammers are on the rise, so you need to be careful not to fall victim. Not having a good credit score should not be why you get scammed. There are plenty of personal loan lenders who offer loans to borrowers in need despite their credit scores. Instead of getting duped, find a legitimate company willing to work with you.