There are several reasons one may look to take on a personal loan. Some of these reasons maybe urgent. This may make the borrower desperate and, in a rush, so much so that they do not look for the signs of a scam. Several borrowers are not aware of the application and approval process and measure a lenders qualification by the speed at which they process the loan.
Without checking the finer details like interest rate, processing fees and terms and conditions of the loan, vulnerable and desperate customers tend to sign loan agreements. There is a tendency in most people to ignore the possibility of being scammed and not get into details.
Millions of people have been cheated of their hard-earned money. It is very important to know whether a lender is registered with the relevant authorities and legit before applying for a loan.
Important things to look out for before borrowing from a lender.
- Whether the lender is registered- It is important to verify the credentials of the lender before applying for a personal loan. One must check if the lender is registered with the RBI and other relevant authorities. You may also want to do some research on the lender in the form of online customer reviews or any other information available.
- Lender demands an upfront fee- One common sign of a personal loan scam is if the lender asks for any upfront fee or payment before the approval of the loan. As per the Reserve Bank of India (RBI) this is illegal. Legitimate lenders never ask for any fees before the approval of the loan and relevant paper work.
- Lender promises a ‘guaranteed approval’- If a lender promises you sure shot approvals before the loan process has even begun, beware! This is not a good sign and you could be dealing with a scamster. Approval of a loan is a process that requires an application, some background checks and bank details etc. It is not possible for a genuine lender to approve your loan without following this process.
- No credit check required- A genuine lender will do a background check on the borrower including a credit score check from the credit bureau. They will want to do a thorough check to understand your credit worthiness. So, if a lender is promising you a loan which does not take the credit score into consideration, then you know that it is a scam.
- Lender is being pushy- If the lender sends you emails or messages with offers that are only valid for the day and urges you to click on the link “now” for your loan, it could be a sign that the lender is not genuine. Remember that such tactics that use pressure are ways of trying to trick you into taking the loan only with them.
- Unusual repayment terms- The terms of repayment should be clearly stated by the lender at the time of approval of the loan. It is important you check the repayment terms and amount clearly. If a lender is asking for an unusually high interest rate or has a complicated repayment schedule, it could be a sign of something suspicious.
Conclusion
Scamsters can go to any length to cheat you. By being aware of a few simple things you can avoid being the victim of a scam while applying for a loan. However, it is important to remember to read the terms and conditions and understand the whole loan process, all charges etc while applying for a loan even with a legitimate and registered lender. This will ensure you have a safe, secure and pleasant loan experience.
MyShubhLife is a registered lender that offers a variety of loans through its NBFC Ekagrata Finance Ltd. Visit our website to know how we can help you with your financial needs.
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