Personal loan is a good option to fund large purchases or consolidate debt or enjoy a dream vacation. Sometimes they seem to be a blessing, when fast cash is necessary to visit an emergency room. In the past, a trip to the local bank was needed to apply for a personal loan but today there are several personal loan services available online. Loan application and approval process can be conducted from your home. Moreover, paperwork is also eliminated from the process and your request for a loan gets approved in 24 hours.
Be cautious of online scam artists
When you look for personal loan services online, it is possible to come across few a loan scams. It is hard to distinguish loan scams from genuine offers. The phony sites may be guided to appear like a reliable personal loan service. Fortunately, red flags are very obvious, so keep your eyes open to the warning signs given below.
Red flags indicating to circumvent personal loan scams
Learn how to spot the scams given below and run in the opposite direction.
Every legitimate lender needs to conduct a credit check. If the lender specifies that there is no need for credit check then it is unsecured loan kind or scam. When you search online and come across advertisements saying, ‘You deserve loan irrespective of credit score!’ or ‘Bad credit? No issue!’ then it is a red flag for potential borrowers. This is a strategy scammer employ to exploit desperate borrower’s frustration.
There are personal loans for those with bad credit but their fees and rates are unfavourable. However, they are better options than falling victim to scam or getting an unsecured loan.
Lender is unregistered
Personal loan services need to be registered with their states then only are they permitted to conduct business. Normally, registration is taken place at the state attorney’s general office. Call the state attorney’s general office to verify the potential lender’s registration status. If the lender is not in the list of state then it is a red flag.
Charges upfront fees
There are some personal loan services, who charge commencing fees of 1% to 8% of the loan amount but how and when you pay the fees is crucial. In general loan fees are paid from the approved loan amount. It means there is no need to send money directly or write a cheque. Upfront fees charged for just loan application is an indication of the scam. These fees can also be called as processing or application fees.
Grammatical and spelling error
Majority of personal loan scams are initiated from other countries, so their English is poor.
Lenders site is not secure
Check for two things on the lender’s website
- Padlock symbol on the page requesting for personal data
- The site address has an ‘s’ after ‘http’ [https://www]
Scammers reject to pay, so as to keep their website safe. Unsafe site means the owner is a fraud.
No physical address
Lender has to provide a physical location. Address needs to be plugged into Google maps. If there is no location provided on the website then avoid the lender.
Lender gives deadline
Scammers place a lot of pressure on their victims. They tell that offer will not be around tomorrow, so you will need to act instantly. Good personal loan company will not use urgency and make you take instant decisions.
How to find best personal loan service online?
Compare several lenders and their terms. Moreover, check their fees and interest rates. Even consider features like loan amount, repayment terms, and customer service.
If you feel something is not right, stay away!