FCA (Financial Conduct Authority) authorises lenders to provide personal loans for individual requirements. It helps one counter issues like- quick car gas re-fill, attending to a medical urgency, paying off the credit card debt by the deadline or financing a car purchase. One can use it for anything per se.
It is easier to qualify and get within the same business day. It is the very reason for the popularity of personal loans in the country.
However, some fraudsters and unregulated lending companies use it to scam individuals of their hard-earned money. Out of these, most are those who need money urgently.
By becoming the victim of scams- they lose money and credit scores. Individuals applying for personal loans with poor credit history find it hard to recover.
However, in the world of living up to the dreams, one must not compromise.
Be careful while applying for personal loans. Once you opt for suitable loans, you can exercise that additional cash flexibility on your terms and meet your needs anytime.
Which brings us to the needful- “How do I spot a personal loan scam?”
The blog lists some crucial aspects that safeguard you from fraud as a personal loan provider. Financealoan is a reputed legal lending firm. Here is a list of the solutions that the firm helps individuals with everyday issues.
8 easy ways to spot personal loan fraud
One of the biggest scams that most individuals find is- no credit check loans. They go for it by name. However, the reality is – it does not work that way. Every legal and reputed lender conducts credit and affordability checks before granting the loan. If you spot anyone providing loans without one, avoid it. There are many other aspects that you must check before applying for personal loans.
1) The Lender hides the profile
As mentioned above, every lender operating in the country must be registered under FCA. It must follow the authority’s guidelines. If you get a call for a loan and the person refuses to tell the location or simply hides it, cut it. Secondly, google the company name and check the spelling. Is it right? Do you spot the company’s location?
If your answer is negative, avoid proceeding with the lender further.
SOLUTION: Alternatively, a genuine lender prioritises comfort and transparency. You can spot contact numbers, locations, websites and authorised reviews to get an idea about it. It indicates a genuine lender. Moreover, you can check the company’s name in the FCA’s register. If you spot it, it is legal.
2) The loan provider demands upfront payment
No, dear, that doesn’t happen here. If a lender demands an upfront fee for a loan, you must leave the table. It is in no way legal. No reputed and legally operating lender ever charges upfront payment on a loan. Instead, he guides you through the total loan costs and the impact of missing a payment on the same.
SOLUTION: However, a legal one may charge fees after your loan terms acceptance. It includes application fees and loan establishment fees, but these charges make total loan fees that you pay the lender for the term. Some charges may differ slightly.
3) Pressurises you to act quickly
It is one of the common baits that scammers use to cheat borrowers. It implies they may force you to accept the loan agreement without any security.
For example, you must have spotted something like “50% more affordable loans, apply quickly.” It is the biggest scam. Nothing like that exists. You won’t pay less by applying for this. Instead, get robbed. Always read the terms and conditions mentioned below for any enticing offer. You can spot an Asterix (*) mark below the landing page or the ad. If there is none, skip it immediately.
The most common individuals for this scam are- individuals with bad credit scores. They wish for an economic loan for lifestyle purposes. Hence, an immediate reaction to an offer like that is natural.
SOLUTION: Explore authorised lenders for loans for bad credit in the Ireland marketplace. It would get you a list of lenders dealing with bad credit scores. Check testimonials or contact someone you know for legal, affordable loan providers.
Contact one of them and analyse how the loan will impact your finances, and enquire about the lender in detail. If they answer all of your queries without any doubt, move ahead. Check and apply. Identify the right amount that you can afford to pay back with interest.
4) Asks for collateral on the short-term or small loan
As a matter of fact, “short-term loans up to €10000 are essentially unsecured loans.” Thus, if any lender asks you to provide a collateral or an asset over the loan, avoid it.
This is because short-term loans generally last for up to 12-36 months.
SOLUTION: Asking for collateral here does not make sense. The lender instead provides them at competitive interest rates. It is because of the ease of approval, no documentation hassle, and flexible terms one can choose according to his finances and affordability.
You can check these loans for urgent purposes or to fix a cash need like- credit card dues, medical issues, re-fuelling car, stationery purposes or important groceries. Therefore, you cannot use it for other purposes like- buying a car or television.
5) You get promotional emails out of nowhere
Spam loan emails catch around 70% of individuals to fake loan scams. Do you often encounter emails stating “collateral-free car loans”, “No credit check loans with 100% approval guaranteed”, or “Mortgage at the interest you desire”? Is all of this a complete scam? No regulated lender can guarantee a loan without analysing the borrower’s capability to afford it. Moreover, the borrower must meet the criteria that may include a collateral requirement.
SOLUTION: If you encounter email messages from past lenders, you share good experiences. It may be legal. However, it is still better to counter-check the mail. Alternatively, do not fall for the email-based offers; instead, check the legit loans in Ireland” marketplace for your needs. You may get ample results. Check for the HTTPS and payment channels security they provide. If it is encrypted with good customer support, go for it.
Bottom line
Guaranteed loan approvals, lack of license, and upfront payment demands are unrealistic. You must avoid engaging in this sort of scam at all costs. Moreover, if you hold a poor credit history, you must be extra conscious of the same. The above-mentioned scams and solutions may help you decide right and save your credit score.
Caleb works as a senior content writer at Financealoan for the past 3 years. He is a writing enthusiast and invests a good time in exploring and writing about financial trends. His keenness in exploring a topic to create a research-based piece is simply unmatched. He believes in including a texture of authenticity with real-time examples and facts.
Caleb’s blogs and articles reveal deep-seated knowledge and expertise. His educational qualification forms the base of his excellent command over the industry and Jargon. He is a postgraduate in Finance and is currently involved in exploring the world of the stock market.
