Loan scams target people who are in dire straits and likely will do anything to get their hands on some cash.
Once a loan scammer has snagged a victim, they will have the borrower fill out an “application” with sensitive and personal information. The scammer will use the victim’s information to hack their accounts.
Arm yourself with knowledge and awareness. Here’s 7 ways to spot a loan scam:
1.) There’s no credit check
Reputable lenders verify that a borrower can, and will, repay the loan before they agree to the transaction. If a lender doesn’t bother checking your credit score and history, you can be sure they have no intention of lending you a dime.
The single exception to this rule is payday loans. Since these have such short terms and extraordinarily high interest rates, lenders don’t bother with credit checks. They still make money even if borrowers occasionally default on their loans.
2.) You’re asked to pay an upfront fee
You shouldn’t have to pay for a loan. When a lender asks you to pay for a loan collateral, insurance or other fees using a prepaid debit card, it’s a scam. Back out of the deal before it’s too late.
3.) The lender isn’t registered in your state
As per the Federal Trade Commission (FTC), every lender and loan broker must be officially registered in the states where they do business. A legitimate lender will have a list of those states posted on their site. If you can’t find this information and the lender refuses to provide further details, they are likely not legitimate.
4.) The lender is not affiliated with any financial institution
Authentic lenders must operate under a bank or credit union charter. This information should be posted on the lender’s website. If it’s missing, you might be dealing with a scammer.
5.) You’re urged to act immediately
If a lender stresses that you must submit your information and make your upfront payment RIGHT NOW, you’re likely interacting with a scammer. Most loans don’t expire after a few hours, or even a few days. The scammer is only trying to get you to act without thinking.
Exit the site immediately and change your device’s passwords as an extra precaution.
6.) The site isn’t secure
Whenever money is changing hands online, you’ll want to verify that you’re dealing with a legitimate site. The site’s address/URL will give you an easy clue: Look for an “s” after the “http” in the address. If it’s there, the site is secure; if it’s not, back out now!
It’s important to check the site’s security as soon as you hit the homepage. Waiting until you’re ready to submit your information can be too late. Creepy as it may sound, lots of hackers use keystroke loggers, which record as you type. That means, even if you haven’t actually submitted your filled-out application, they may already have all the information they need to scam you. If you check for a site’s security as soon as you’ve connected, though, you’ll exit any unsecured sites before you start typing.
7.) The lender has no physical address
Do a quick online search using the lender’s official name. If it’s legitimate, a search should bring up a physical address for the company. If the lender’s name doesn’t turn up anything beyond the online world, opt out immediately.