When you’re in need of money and have a bad credit score, it’s easier to accept practically any personal loan offer. However, scam artists are waiting to take advantage of your desperation. Personal loans may be provided by them through commercials or online websites. They could send you a flier promising you a loan regardless of your financial situation.
Some dishonest businesses and individuals will take advantage of those seeking a loan. Check out our suggestions below on how to recognise a loan scam and what to do if you think a fraudster is targeting you.
How can you identify a loan scammer?
Scammers can find potential victims with remarkable ease. They can communicate with their victims by phone, email, SMS, or social media. They could be someone you know or someone you’ve been introduced to through a common contact. They can potentially get your information after you’ve submitted it to a reputable loan comparison website. They could, in a nutshell, be (or appear to be) anyone.
Scammers may try to defraud you by requesting money upfront or guaranteeing a loan approval that is guaranteed. They may even impersonate a legitimate organisation and offer lower rates or fees than those advertised on the legitimate lender’s website.
What does a loan scam look like?
Scams involving loans come in a variety of forms. It’s possible that the offer isn’t valid. Someone may claim to be a representative of a well-known company when they are not. Alternatively, they may ask you to do something suspicious, like mailing a cheque to transfer funds. Basically, if it’s a scam, the money you’re requested to send will go to the scammer rather than to the loan you’ve been offered.
Scammers may promise speedy gains, tax-free perks, a low-risk opportunity, or claim insider knowledge. They’ll almost certainly utilise high-pressure sales tactics to compel you to make a significant decision quickly.
Loan scam red flags
There are a few indicators that should cause you to be concerned right away:
- Be cautious if an email message contains errors in spelling, capitalisation, punctuation or grammar. That demonstrates a lack of professionalism, at the very least.
- Scammers present you with professional-looking marketing brochures and documents, but they aren’t registered with ASIC (Australian Securities and Investments Commission).
- The scam artist poses as a professional broker or portfolio manager, but they lack or claim not to require an Australian Financial Services (AFS) licence.
- Scammers claim to be linked with a well-known organisation or brand, but there is no evidence to support this claim.
- Even if you haven’t seen an official offer, scammers will typically pressurise you to make a decision right away. Legitimate lenders will never pressure you to sign a loan agreement before you’ve reviewed the rates and terms.
So, what should you do if you suspect someone is trying to scam you?
If you believe you have fallen victim to a loan scam, don’t panic! By law, all reputable lenders must have an ASIC credit licence. On ASIC’s website, you can see if a lender is licenced. If they don’t have a licence, don’t provide them with any information and report them to ASIC.
Availing of a loan is undoubtedly a significant financial decision that requires upfront research to select the right loan type.