Today, there are plenty of legitimate lenders in the market offering personal loans in India. However, while searching for a personal loan, you will also come across many illegitimate scammers who are looking to take advantage of naive consumers.
To ensure that you are protected from any such online loan scams and to avoid any future hassle, it is important to know the common warning signs of finance fraud or personal loan scams.
Red Flags of Personal Loan Scams
Personal loan fraud can be hard to identify as there are different types of online scams that target customers. While some scams try to access valuable personal information about your credit card number, bank account details, etc., others may charge sky-high personal loan interest rates and processing fees.
Let us take a look at four red flags that can help you identify personal loan scams:
1. The lender is not listed with the RBI
It is a big red flag if a personal loan provider’s website is not listed with the Reserve Bank of India. Ensure that you do not download the app of any such lender as it is mandatory for loan providers to have their website listed with the RBI in India.
You must also see to it that you download personal loan apps only from the Google Play Store or the App Store and avoid downloading apps from any unregistered entity’s website.
2. The lender offers loans without KYC
If the online personal loan app offers loans without implementing KYC or does not provide transparency about the processing fees and official address, it is a call for caution and hence, you should be wary of such apps.
3. The lender guarantees loan approval before you apply
If the app guarantees approval of a personal loan even before you apply for one, it is another sign of financial fraud. Personal loan providers usually have various requirements that you need to satisfy to get approval for a personal loan. Some of these criteria are your age, credit history, income, etc.
4. The personal loan offer sounds too good to be true
Legitimate loan providers will not just call you out of the blue with a lucrative personal loan offer. If a loan provider reaches out to you first, this may be a sign of a finance scam that is trying to get access to your personal banking details. Hence, it is best to avoid responding to lenders who make you an offer by phone.
How to spot a legitimate loan company
These days, many lenders offer loans even if you have a below-average credit score. Here are some ways to check the legitimacy of personal loan lenders:
Check for the lender’s contact information:
A legitimate lender’s contact details like their email address, customer service number, and physical address must be easily available on their website, even if they are an online personal loan lender.
Check the lender’s online reviews:
Look for the app’s customer reviews on Google to get an insight into the experience of applying for a personal loan with the lender.
Ensure that the lender is registered:
Legitimate loan providers must register themselves with the RBI before offering personal loans.