4 Common Personal Loan Scams and How to Avoid Them

1. Identity Theft and Phishing

Many criminals involved in cybercrimes pretend to be lenders or financial institutions to steal highly sensitive information from victims. They often call or email victims pretending to be their banks. 

If the victims fall into their traps and click on any shady links, they can end up providing unrestricted access to your sensitive information and bank accounts. So if you get any emails or text messages from these so-called lenders prompting you to click on a shady link, DO NOT open the link. You may end up losing your sensitive data and bank account credentials.

2. Fake Online Lenders

There are many online lenders who offer secured and unsecured loans. They have a proper website and often use professional ways to attract borrowers, such as online ads. 

However, not every online lender uses these methods, which can be an indication of a scam. Online personal loan scams are, in fact, quite common. For instance, if a company makes unsolicited calls, sends an email offering a loan, or reaches out to you in any unsolicited way, it’s possible that they’re a scammer.

Cash in Minutes will never reach out to you directly unless you have submitted an online loan application or reached out yourself. It is important to recognize such attempts so you can avoid providing your sensitive information to a scammer. 

3. Advance Fee

Many lending companies have origination and application fees to process your loan applications. These are usually charged to cover the service and processing costs.

However, if a lender promises you a personal loan regardless of your credit history and asks for an advance fee, do not fall into their trap. Scammers requiring an “advance fee” usually target people with bad credit.

Cash in Minutes never asks for an advance fee. Once the loan has been processed, any applicable fee is deducted from your loan amount. So make sure to watch out for lenders requiring a fee in advance. 

4. No Screening Process

Every lender has a screening process that involves multiple steps of verification before offering a loan. For instance, they have a minimum credit score requirement for which they run a soft credit check. They also consider your debt-to-income ratio before making an offer.

Any legitimate lender will run a background check on all of their potential borrowers to prevent themselves from falling into a financial burden. They also carry out underwritings to make sure that the borrower is actually capable of paying the loan back.

So if a lender has no screening process and promises a “guaranteed” loan without any verification, they are possibly scamming you.

How to Avoid Personal Loan Scams?

Now that you know about all of the common personal loan scams, make sure to stay vigilant. You can avoid getting scammed by making sure that the lending company you’re considering is legitimate. Check their online reviews, social media accounts, and their legitimacy. 

You should also make sure that they have a proper screening process for offering loans. They should not seem hasty to offer loans or ask for any “advance” fees. So do your homework and ask about any applicable fees and rates.

You should also look out for lenders offering unbelievably low APRs to even people with bad credit. It is not practically wise for a lender or any financial institution to offer extremely low APRs to bad credit borrowers.

Additionally, avoid paying any fees upfront. All legitimate lenders deduct the applicable fee from your loan amount. Anyone asking for an upfront fee before even offering the loan is a red flag.

Cash in Minutes does not ask for any upfront fee when you apply for a personal loan. You won’t be asked to make any payment until your loan has been approved. The origination fee is deducted from your loan amount itself. So you won’t have to pay any fee in order to acquire a loan. 

Bottom Line

Personal loan scams are quite common and affect hundreds of people every year. However, by identifying the common tactics used by scammers, you can prevent yourself from losing sensitive information. 

Make sure to watch out for the signs of personal loan scams we mentioned in this article so you can avoid financial loss.