Personal loan borrowing continues to be increasing dramatically over the past five years. And with the financial hardships many have faced throughout the pandemic, unsecured loans are a more essential financial tool than ever.
Unfortunately, this surge in borrowing has taken by using it an increase in scams. Fraud within the financial industry isn•t a new trend. According to data from the Federal Trade Commission, consumers lost a lot more than $1.9 billion to fraud in 2022. Given the other economic challenges individuals are facing right now, it•s more important than ever before that individuals be able to recognize the signs of a personal bank loan scan.
How do you look around for a personal loan?
When you•re looking around for a personal bank loan lender, you want to vet prospective lenders and ensure the businesses you•re considering using the services of are reputable and trustworthy.
Online marketplace PayPasser is a superb starting point. With PayPasser, you can compare rates and lenders in a single window • plus, it's 100% free!
5 things you can do before selecting a personal loan lender
However, before you decide to land on a lender, you're likely to want to follow this straightforward checklist to save money and time. Here are five stuff you should do before you apply for a personal bank loan.
- Look for details about the lender
- Make sure their website is legitimate
- Read online reviews
- Use government tools to vet
- Shop and compare loan rates
1. Look for details about the lender
Before handing your sensitive information over to a business, do your homework. The company•s website is a great starting point. Most legitimate lenders include information about the company, leadership licenses and much more. You may also use an internet search to see what information is available on other websites. If there•s not much information, maybe it's a bad sign.
Check out PayPasser's partner lenders below. Just insert your desired loan amounts and estimated credit score to get going.
2. Make certain their address and website is legitimate
You will easily notice a lot about a company•s legitimacy from its website. First, financial companies like personal bank loan lenders have to store lots of sensitive information. If they don•t possess a secure website, your private data may not be safe.
You may also confirm that the address on the web site is legitimate. If there•s no website listed whatsoever, that•s likely a poor sign. Trustworthy companies usually publish their contact information for the benefit of customers and government departments.
3. Read online reviews
Online resources make it easy for customers to read reviews using their company customers before selecting a personal loan lender. Nonprofit organizations like the Better Business Bureau track complaints and rate companies based on how ethically they treat customers.
You can also read PayPasser's full reviews of the personal loan lender partners. PayPasser has personally vetted each lender to help make the process simpler for you.
4. Use government tools to vet
Lenders must register in every state where they do business. Your state•s financial agency will tell you whether a specific clients are registered in your state. You can also vet lenders by looking for complaints or charges from or filed with the Ftc and the Consumer Financial Protection Bureau.
5. Shop and compare loan rates
When you•re in the market for an unsecured loan, it•s vital that you look around to get the best loan rates and lenders available. Using a trustworthy source like PayPasser, you can find a listing of legitimate lenders, get the best interest rates and use a personal bank loan calculator to see what you can expect to pay.
5 symptoms of an unsecured loan scam
Don•t become the victim of a personal bank loan scam. These five warning signs can help you to recognize and avoid fraud.
- The lender guarantees loan approval
- There's no credit check
- The lender requires an upfront payment
- There's little information about the company
- The lender contacts you directly
1. The lender guarantees loan approval
If a lender guarantees approval without an application, it•s probably too good to be true. Lenders generally verify a borrower•s income, debt-to-income ratio and credit rating before offering financing. A promise of guaranteed approval can be a sign of a gimmick.
2. There's no credit check
Running a credit check is really a way for financial institutions to manage risk. With no credit assessment, they have no method of knowing if they•re lending to some high-risk borrower. And if a lender isn•t concerned about risk, there•s probably a reason. It could be a sign either that the transaction is a scam or that you•re being offered a predatory interest rate.
3. The lending company requires an upfront payment
Some fraudulent lenders ask for upfront payment however never deliver the actual loan. If you•re using a legitimate company, you•ll never have to give money until the loan agreement is signed. Some lenders do require origination fees on loans however these aren•t made upfront. Instead, your origination fee may come out of your loan proceeds or be wrapped up in the loan.
4. There's little details about the company
Most reputable companies share enough detailed information online regarding their background, mission and company leadership directly on the website. Perhaps more to the point, it ought to be easy to find information about a company elsewhere. If financial publications and consumer protection agencies aren•t acquainted with the organization, maybe it's a sign that it•s not legitimate.
5. The lending company contacts you directly
It•s likely a warning sign if your company proactively contacts you having a loan offer. While some companies do use mail and email marketing as a way to promote your finance services, these are mass marketing efforts. An immediate telephone call from the lender is likely a sign of a scam.