How to Identify and Avoid Loan Scams

Cases of people falling prey to loan scams have been on the increase in recent years. Despite concerted efforts by the authorities and financial institutions to warn people about the scams, the number of victims continues to rise every day. As an individual, you may want to learn how to identify scams and avoid them.

The sad reality is that most people who lose their hard-earned cash to scammers are those of us in the lower end of the economic spectrum. One of the many reasons it is so easy to get duped is the fact that sometimes we get so desperate financially that we grab just any deal that we come across.

In order to avoid dealing with fraudsters, you need to know some of the most common signs to look out for in any situation that has something to do with loans. Some of the signs may not always be so obvious and that is why you should always remain cautious.

Here are some tips to help you identify and avoid loan scams:

Lack Of Interest In Your Credit History

Most credible lenders will require you to provide your credit report before they approve your loan application. This is what gives them the assurance that you will be able to repay the loan. Operators of loan scams, on the other hand, don’t care whether you are a high-risk borrower or not. Of course, there are genuine lenders who offer no credit loans. Always tread carefully when the lender is over eager to lend you money.

No Known Registered Office

The law requires lenders to register in the cities or states in which they are based. If you are dealing with a lender with no proof of registration, that is probably a scam. Their website is one of the best places to look for registration details as well as the physical address.

Requirement That You Make An Upfront Payment

Any loan proposal that demands that you pay any fees upfront is highly likely to be a scam. So if you are being asked to part with some money under the guise of “processing” or “insurance” fees, don’t agree to pay. In most cases, they are just looking to make a quick buck off you.

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Unsecure Website

Genuine lenders are always concerned about the integrity of their websites. They put in place security measures to protect their clients from identity thieves. So if you notice the site is all over the place without any safety measures, the lender may not be credible.

Unsolicited Loan

It’s not very usual for a lender to offer people loan facilities with a cold call. When you have a lender contacting you to initiate any type of arrangement, you shouldn’t accept the offer too quickly. Always be wary of service you don’t need or haven’t asked for.

If you don’t want to get scammed, you should remain as vigilant as possible when approaching any loan propositions. You should be especially cautious of deals that appear to be too good to be true. Take some time to think things through before you make a decision.

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