1. Predatory Lending
Predatory lending is practiced by loan sharks, who influence borrowers to accept unfair loan conditions through fraudulent and forceful actions for a loan that the borrower does not want. Most of the times, loan sharks target people who desperately need a loan but are unable to secure loans through legal means due to their poor credit scores or other factors. Loan sharks will appear to be very friendly to get you to accept a loan deal from them, but once you do that, they will hound you relentlessly. Do not be fooled by them – you will not be able to pay back the sum with the preposterous interest rates that loan sharks penalise on you. Accepting a loan from loan sharks will leave you in huge debt, which will absolutely leave you worse off than before.
2. Bad Credit Loans
Bad credit loans, otherwise called guaranteed Online Personal Loans, may seem to be convenient and alluring. However, when a lender appears not to care about your credit history or income, it is most probably a scam. Genuine lenders will always take an interest in your credit history. In the same way, these lenders don’t guarantee that your Personal Loan request will be approved. Also, some online loan providing companies could simply be trying to solicit your personal information for corrupt uses.
3. Upfront Application Fees
Be wary of lenders requesting for an upfront application fee, especially if they claim that you have to pay a certain amount even before your application is approved or your loan is disbursed. The lender will attempt to justify this fee as a necessary step to securing a loan from them. After you have provided them with the bank account details and transferred them the money, they will cut off all contact and disappear with the money. Nevertheless, do note that most banks also have a processing fee to secure a Personal Loan. You should make sure that lenders you approach are genuine by checking that they are legally registered.
4. Loan Phishing
Be wary of scams that imply to be from trustworthy companies to trick you into revealing the personal information. They may use a website which looks just like the websites of genuine financial institutions or utilise a genuine registration number issued by the Monetary Authority of India. They can then get your bank account number, passwords and all your other personal information to steal your identity and money. Before you submit personal information online, check for the authenticity of the site and ensure that they are secured sites.
In India, a large number of people apply for Personal Loans. A Personal Loan is a need-based product and at times the consumer needs a very large amount of money urgently. Banks hire outsourcing marketing companies to sell Personal Loan to the customers. Most of the lenders’ Personal Loans are sold through these marketing or DSA channels. The rest is contributed by direct bank sales team, and so on. There are many customers who are duped by so-called agents while taking a Personal Loan. Consumers should protect themselves in followings ways to prevent from such scams:
1. Never pay any cash or fee in advance to get a Personal Loan: A consumer should never pay cash or any advance fee to the people who promise to get them a loan. Banks only charge processing fee upfront which is deducted from your sanctioned loan amount. Any person who asks for a fee for a getting a Personal Loan sanctioned from the consumer is misguiding them and most likely will misuses that money and loan will never get sanctioned. Customers should understand banks pay their agents for loan disbursals and hence these agents shouldn’t charge anything from the consumer. Agents asking for any upfront fee are fraud most of the times. If a person asks you for an upfront fee by the name of a particular bank, report that case to the concerned bank.
2. Never apply at multiple banks at one time: Most of the agents act as DSA of all banks and try to persuade customers to apply for multiple banks. Please do not do that activity. Applying for a Personal Loan in several banks will affect your CIBIL record. Lenders may reject your application if there are multiple inquiries as they see you desperate for credit. While applying at multiple lending institutions, scammers can use your credentials for stealing your information.
3. Read the loan agreement before you sign it: Once your Personal Loan request is approved read the agreement completely and carefully before signing it. You may find yourself in a tricky situation later if you find any hidden charges or clauses associated with your Personal Loan.
4. Check the identity of the individual you give credentials for the Personal Loan: Ensure you check the authenticity of your loan agent to know whether he is from the bank or the agency and if that agency is listed with the bank or not.
5. Apply with a reputed lender only: It’s crucial to apply for a Personal Loan with reputed and experienced lenders only. For example, you can Apply for Kotak Mahindra Bank Personal Loan, they have years of experience in the lending domain or you could apply at the renowned online lending platform.
We hope knowing about these Personal Loan scams and ways to prevent them can help you a great deal when you apply for a Personal Loan in future.