A personal loan can be an excellent option for those who need help paying off debt, or for those who could use extra money to cover life’s expenses. However, it is an unfortunate fact that as the loan services industry has grown, fraudulent loan offers have become more common as well.
Many of these scammers intentionally look for people trying to rebuild their credit or individuals they suspect are desperate for a loan, since they think they will be easier targets. In some cases, they even pretend to be calling on behalf of legitimate lending companies to deceive their victims. These scams have disrupted people’s lives and damaged the credibility of lenders as a whole.
So, how can you be sure you’re dealing with a credible lending institution? Here are some important questions to ask yourself while researching or interacting with a lender:
Does the offer seem unrealistic, outrageous or unbelievable? Is the lender making offers that seem too good to be true? Are they not interested in your income, payment history or other important factors lenders typically ask about? These are classic signs that you may be dealing with a bad actor.
Are upfront payments required? If someone claiming to be a lender demands upfront payment for “insurance,” background/credit checks or “processing fees,” you should be suspicious. This could be a scammer trying to quickly con you out of your money. It’s best to walk away if any lender starts demanding payments before they are willing to provide any value.
Do they have a working phone number? What about physical, brick-and-motor locations with real people working there? It’s generally not a good sign if the only place you can find or contact a lender is their website or a few social media profiles. It is far easier to create a fake company with an online presence than it is to set up a phone line or establish physical locations where you can speak to actual employees.
Bottom line: A lack of any phone number or physical address listed on the website could be a red flag. If a lender has neither, you should proceed with caution.
Did they contact you via SMS? SMS text message scams are a growing issue. The perpetrator’s goal is usually to get you to share your bank account information. They may claim that your account has been compromised (this is an attempt to steal your username and password). Another common claim is that they need your information in order to wire you money (they’re probably trying to clean out your account). While many legitimate lenders do contact customers via text, they do not text unsolicited loan offers to people they’ve had no prior contact with, or ask for sensitive bank account information in a text message.
How long have they been in business? Do they share reviews from real customers? As a general rule, it’s safer to go with a lender that has a proven track record of honesty and success. Try to find out about the company’s history before taking out a loan.
Likewise, look for customer feedback. A credible lender is not afraid to share testimonials. It should be easy to find these on their website and social media platforms. If you see no customer reviews or they seem fabricated or inauthentic, it’s best to trust your instincts.
Do they use high-pressure sales tactics? If you feel like the lender is trying to twist your arm to take action— especially very early into your interactions with them — you should be on your guard. A lender that is willing to work with you to understand your needs and help make a decision that’s right for you will not try to pressure you to immediately take out a loan.
You Have the Right to Ask
When you speak with a lender, don’t be afraid to ask them any of these questions; you are the customer, and you have the right to know these things. If they cannot or will not provide you with answers, that’s a sign that you may be dealing with a scammer. In the end, it all comes down to research. Be sure to thoroughly look into any lender you are considering.