5 Effective Ways to Spot Lending Scams

Lending Scams And How To Avoid Them

The Covid-19 crisis brought a terrible economic fallout. The desperate times led to increased lending scams that existed before but have become more prominent during this time. Scam lenders employ many tactics to steal from you, and spotting them requires a keen eye and a curious mind. Increased online lenders have also made it easier for scammers to grow in the market..

Reputable lenders include SACCOs (Savings and Credit Co-Operative societies), credit unions, banks, and reputable online lenders. Before we get into the signs of a loan shark, you can check out the Scam Detector's verified partners – if you look for legitimate lenders: Ideal Loan, Sweet Loans and Cash For 2022.

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Let's continue.

Identifying Loan Scammers

A loan scammer makes money by offering you fraudulent loan offers and collecting loan fees and sensitive personal information without any intention of providing you a loan. You may fall for a lending scam since some lenders promise you a loan without performing a credit check. Other lenders will offer you upfront loan offers, collect fees, or some collateral, then vanish.

Whereas scammers are evolving, it is well known that the more things change, the more they remain the same. In what ways are financial scams similar?

1. Lenders Who Contact You Directly

Genuine lenders may contact you directly. However, real lenders contact you based on your previous credit history, while a scammer may contact you and request your personal information to access your accounts.

A safe method is looking for a genuine lender is searching through the lender's registration in the state's attorney general's office. Another way to identify a scammer is through the loan pitch. A scammer may guarantee you approval without background checks, be vague about fees, and promise you zero lending requirements.

2. Lenders Who Pressure You Into a Loan

Some loan offers that reach you may be time-barred. Loan offers that expire within a short period or loan applications that feel urgent are very likely to be a scam. A reputable lender will have consistent loan offers based on factors such as current loan rates and creditworthiness. Genuine lenders may offer fee waivers, but such waivers do not affect loan terms or the loan interest rate.

Look out for a lender who offers you a time-barred low-interest rate. Such lenders are likely to be scammers.

3. The Lender Does Not Have Any Guarantees To Get Back Their Money

No business-minded lender will offer you money without a sure way of getting back the investment with interest. A scammer probably knows that you are funding them and not the other way around and will have specific absurd loan requirements, including:

A lender who does not perform credit checks is very likely to be taking you for a ride. Credit checks offer a lender knowledge on the risk you are to the institution, and thus a poor credit score almost guarantees high-interest rates. Genuine lenders perform credit checks for all potential borrowers, even if the loan is designed for clients with bad credit.

A lender who guarantees loan approval with zero requirements may also be a scammer. Tags such as “guaranteed approval” are very likely to be scammers. Scammers also have a habit of intentionally being vague about loan fees and then bringing them forth after loan approval so that you feel pressured into signing for the loan. A genuine lender will publish all fees and is transparent about all costs and the loan application process.

4. The Lender Lacks a Physical Address

All lenders, including online ones, have a physical base of operation. A reputable lender has a physical mailing address and a staff list. A brick-and-mortar location allows for accountability and enables the lender to be contacted in case of any necessary legal redress. A lender without a physical address you can visit is very likely to be a scammer.

A lender not registered by the state is also likely to be fraudulent. The law requires that the attorney general registers every lender. Registration involves a vetting process that a scammer may not be willing to undergo. Before submitting any sensitive information to any lender, take the effort to visit the attorney general's website.

5. Lenders Without a Secure Website

Lenders handle vast volumes of sensitive personal information. For this reason, such websites have Secure Sockets Layer (SSL) certificates. A scammer lender's website may have an ‘HTTP' prefix instead of ‘HTTPS.' Such minor variations should inform you to be extra careful when dealing with such a lender.

If you feel a website might be suspicious, feel free to verify it using our unique Scam Detector website validator below:

Avoiding Scammers

While identifying a scammer when they reach out to you may be easy, you also should learn how to avoid getting scammed. This involves:

• Reading online reviews and performing online checks.
• Look at the lender's Better Business Bureau rating.
• Check if the state registers the lender.
• Talk to a trusted person before making any financial decisions.

Dealing with reliable lenders such as SACCOs, credit unions such as the Space Coast Credit Union, and banks reduce your chances of getting scammed. It would be best if you made an effort to conduct loan comparisons using various online tools to get cheaper loans instead of trusting some sketchy lenders who promise cheap credit.

If you suspect a fraudulent lender, make an effort to report the lender to the appropriate regulatory authority in your state. All factors considered, your vigilance and patience will serve as reliable virtues to avoid getting scammed.

Many scammers are offering fraudulent deals. Lenders promising very cheap credit that is below market range or lenders who pressure you into a loan and lenders without a physical address should trigger flags. Identifying scams and avoiding scammed should be your first task when looking for credit. Credit unions like the Space Coast Credit Union allow members to access cheap loans and low-interest rates but don't fall for the ‘too good to be true' offers.

How To Report a Lending Scammer

Let your family and friends know about these lending scams by sharing the article on social media. You can also officially report the crooks and any other suspicious lending activity to the Federal Trade Commission using this link below:

Report To The FTC Here

How To Protect Yourself More

If you want to be the first to find out the most notorious scams every week, feel free to subscribe to the Scam Detector newsletter here. You'll receive periodic emails – we promise not to spam.

Meanwhile, educate yourself with some other lending fraud-related articles right under this paragraph. Last but not least, feel free to use the comments section below to expose other financial scammers.

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