How to Spot Online Loan Scams

iQuanti: Online loans are a way for lenders to offer fast money loans to borrowers without meeting in person. These loans are a helpful tool when you need fast access to cash that you can repay quickly. And although it may be tough to find good online loans with no credit check, there are many lenders that have lenient credit score requirements and will approve borrowers with poor or fair credit. But since many online loan businesses are entirely digital, they are also a target for scams. So, if you're thinking about an online loan, protect yourself by knowing how to spot online loan scams.

What are online loan companies?

An online loan provider allows you to go through the loan process completely online, from application to approval. While some well-known banks and other establishments may offer online loans as part of their suite of products, other companies may forego brick-and-mortar locations to offer lower fees to their customers. Unfortunately, some scammers can seem like legitimate lenders, so it's essential to know how to identify a scam.

Six ways to spot online loan scams

Getting taken advantage of in an online loan scam can wreak havoc on your finances and your credit. That's why it's essential to be aware of these ways to spot online loan scams. Your scam radar should be going off if:

  1. The business is not legitimate, according to reputable sources. Resources like the Better Business Bureau exist to help consumers confirm if businesses are legit. Check the company's public records and reputation on other review websites as well.
  2. The company's website isn't secure. Any website that requires personal financial information should be secured. With secured websites, you should see a lock to the left of the web address (URL). That lock means information sent and received by the website is securely encrypted. Websites without a lock may be fraudulent.
  3. The lender's website has numerous issues. Another major red flag that may signify a scam is the presence of many grammar or spelling issues. A reputable company will have a team responsible for managing the website, including ensuring the customer experience is pleasant, and the information is easy to read and understand.
  4. The lender pressures you to act now. A reputable lender won't rush you into a decision but will allow you to gather information and apply when it's right for you. But a company operating a scam may require you to act immediately to lock in a promotional rate. In reality, their pressure is because they've hooked you with a scam and are desperate to get your money before you wise up.
  5. The company asks you to send money first. Some online loan scams will target individuals by asking them to send money in advance to secure a loan or pay fees. They may even ask that you submit payment in the form of a prepaid credit card. This is a major red flag and one that should have you closing out of the browser window quickly. More reputable online lenders will likely roll fees into the loan amount, thereby subtracting it from the loan they send you.
  6. The lender doesn't care about your credit history. Many online lenders will use credit score and history as eligibility criteria before approving you for a loan. So, any lender offering online loans with no credit check that insists credit score doesn't matter should make you think twice.

The bottom line

Online loans are a convenient, fast way to get the money you need. But before you provide any personal information to a potential lender, it's important to assess the company to ensure they're not operating a scam. Look out for major red flags like an insecure or poorly maintained website or lenders that pressure you to act now or send them money in advance. Being aware of these common online loan scams can help keep you safe while increasing the chance that you'll be able to access the money you need.

Source: iQuanti, Inc.

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Categories: Personal and Family Finances

Tags: loans, online loans, personal finance