Many people turn to personal loans when faced with financial difficulties. Once approved, personal loans offer borrowers some much-needed money to settle pressing cash needs. Fraudsters usually try to capitalize on the vulnerability of some personal loans seekers mostly those people looking for quick cash.
Most loan scammers take anything they can from loan seekers including personal information and sell it. Although the FCA has strict measures in place to catch and punish loan scammers, there are still many incidences of loan scams in the UK. So, how do you avoid being a victim of a personal loan scam when you are in need of cash? What should you do when you want to get a personal loan without being scammed?
1. Be on the lookout for lenders who ask for upfront fees
One of the easiest ways to spot a loan scam is to check if you have to pay anything to get a loan. The FCA calls it Advance Fee Fraud. Although some lenders may charge fees like loan origination fees, you shouldn’t pay anything for your loan to be processed. It is important to avoid lenders who charge you anything before you get your loan since most personal loan scammers do this as well. With most loan scams, you pay upfront fees between £60 – £100 but never get a loan.
2. Consider the loan marketing tactic
You can also be able to spot a personal loan scam by checking the marketing tactic being used to market the loan. Although it is completely normal for lenders to market personal loans to potential borrowers, the marketing tactics shouldn’t be too aggressive. If you get the sense that you are being pressured to complete a loan application or submit your personal information, think twice. Lenders usually send quotes to potential borrowers. However, they shouldn’t pressure you to take a loan or act fast/immediately.
3. What are the credit requirements? (No credit requirements? Run!)
The credit requirements should also help you identify loan scammers. Reputable lenders never lend to borrowers without assessing their ability to repay the loan. A lender should be concerned about your credit history and/or credit score since it’s an indication of your ability to meet your debt obligations. If a lender doesn’t seem to be concerned about your credit history, credit score or any other information that shows your ability to repay the loan i.e. your employment information, that’s a serious red flag.
4. Does the lender have a reputation, physical location information?
Before you borrow money from any lender, it’s advisable to find out as much information as possible about that lender. Reputable personal loans lenders have a reputation and a good one of that matter. Scam lenders are usually anonymous. It’s hard to find out crucial information about them i.e. their location, registration/authorization/licensing details, etc. when you perform a quick search online. You can visit the Financial Services Register (https://register.fca.org.uk/) to find out if the lender in question is regulated. If you have problems finding information about a lender or what you find is negative, beware.
5. Are the lender’s connections questionable?
Most loan scammers usually purport to work with established financial institutions. Although there are many legitimate loan brokers, loan scammers can’t prove their connections with reputable lenders. To avoid being scammed, you have to be willing to do some homework. Reputable lenders usually have a list of loan brokers they work with, so it shouldn’t be a problem ascertaining a broker’s connections with a reputable lender. You should get details of a broker i.e. phone numbers and location information from the lender in question. If you are receiving calls from unofficial numbers, beware.
When you are in dire need of cash, it’s easy to fall to scams. The above information is bound to help you separate legitimate personal loan lenders from scammers. Loan scammers always ask for upfront fees. They also use aggressive marketing tactics and care less about your ability to repay. Loan scammers also have questionable reputations and connections to legitimate lenders so, it’s very important to be skeptical before you take out any personal loan regardless of how slick the loan promotion looks. Always remember; loan scammers work hard to disguise their scams as professional and legitimate operations.
In case you fall prey to a loan scam in the UK, don’t worry. You can report loan scams in the UK to the FCA: Hotline: 0800 111 6768 or Action Fraud. Phone: 0300 123 2040, Website: http://www.actionfraud.police.uk/
A great alternative to personal loans when you are in dire need of cash is payday loans. Swiftmoney is one of UK’s most reputable payday loan lenders.