The Frauds in the World of Lending

The Frauds in the World of Lending

A personal loan may be an extremely helpful thing if you know how to use it. Even people may use personal loans to consolidate their debts or bad credits. Personal loans are also available to grant access to quick cash in emerging situations. All these benefits make personal loans a good target for scammers. In accordance with the Federal Trade Commission, $1 trillion was lost because of scams only during 2017. In order to stay away from frauds or scams during the lending process, you should be equipped with valuable information.

What are Personal Loan Scams?

Generally, scammers try to take advantage of a person who is in need of money. First and foremost, the scammers request to pay fees in order to provide the loan. Generally, they may call it an origination fee or even an insurance fee. After the borrower pays the fees, lenders vanish. Be aware, that advance loan fees are illegal and no legitimate lender is entitled to require money for borrowing your credit. However, scammers may also fraudulently use your personal information such as your name, date of birth, and social security number in order to gain financial profit. This kind of scam may cause heavier damage to your reputation. We are living in a virtual era and it is important to keep your personal data protected because thieves are waiting for your mistake.

No Credit Check Required

In traditional lending, the credit history and additional financial information are basically required in order to understand the creditworthiness of the borrower. If the lender does not request you to provide proof of your credibility or other financial information it must alert you about an illegitimate lender. Scammers are not interested in your creditworthiness because they only need your funds. First and foremost, each borrower must read the requirements provided by the lender of funds. Sometimes people with bad credit ratings try to get [quick cash] by all means, however, remember that a bad rating does not mean that you should be a potential victim of scammers. Moreover, for people with bad credit, payday loans may be available when they are in need of quick cash. Payday loans are available online at Bear in mind, that is not a lender of funds, alternatively, it acts only as a platform for connecting lenders and borrowers. If you need to cover your financial crisis, firstly you should fill out an online application in order to get your quick cash from direct lenders.

Upfront Fees

The usual key indicator of scamming is when you are requested to pay upfront fees for guaranteed approval. No one can guarantee the approval of the loan before checking your credit history and other related financial information. If you noticed that the lender hints at the payment of fees in exchange for loan approval, run away from them. The second red flag that you can notice is the payment method of upfront fees. If the lender requires payment of fees in cash and by all means tries to escape the payments by credit cards or personal check, then you have to be maximum conscious.

The Lender is not Registered in your State

Based on US regulations personal loan lenders must have a registered license in the exact state where they run their business. When you are trying to clarify the legitimacy of lenders, pay close attention to the list of states where the company is entailed to run a business. If your state is not included in the list, but the lender is still available to provide lending services, be aware, that it may be a scammer. For being a hundred percent confident firstly check the lender’s license at the local attorney’s office.

Sense of Urgency

Psychologists tend to believe that urgency is one of the best tools to manipulate a person. All scammers know these techniques, and they try to create urgency and mislead borrowers.  The most common manipulation strategy looks like special offers that allegedly expire. None of the legitimate lenders will repress you to make decisions instantly.

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