How To Identify and Avoid Personal Loan Frauds In India

The scam and fraud is increasing for a personal loan. Read to know how to identify and avoid personal loan frauds.

15 Nov,2022 13:10 IST 15
How To Identify and Avoid Personal Loan Frauds In India

Demand drives supply, and the financial services sector is no exception. Since the digitisation of monetary activities, there has been an alarming trend where fraudsters trick consumers by acting as respectable financial institutions. These loan scams in India resulted in individuals losing money, property, and, in extreme situations, their lives due to fraudulent lending schemes and their aftermath.

These incidents, while highly prevalent, may be avoidable with proper examination and awareness. Here are a few warning signs of loan fraud in India.

• Demanding An Advance Payment:

You do not have to pay an amount to secure a loan. One of the most common loan scams is when fraudsters demand a fee before giving a loan. Any loan that requires money up front for 'insurance' or 'filing' is not legitimate. Financial institutions levy a processing fee, which lenders deduct from the loan amount.

• Loan Approval Guaranteed:

If you apply for a personal loan, there is no guarantee that you will get approved. Loan acceptance depends on various factors, such as credit history and information verification.

• Online Data Phishing:

If the lender's website lacks an 's' after the 'HTTP,' this is a warning, and you should cease browsing such sites immediately. The lack of an 's' or a lock icon next to the address indicates that the website is unsafe and could be a fraud.

If you apply for a loan through such a website, they will have access to your personal information, like your bank account number and password. Many loan scam sites seem like the official websites of banks and other financial organisations. Always double-check the website address.

• No Credit Check Is Necessary:

Beware if a lender is unconcerned with our credit score and offers a personal loan with the standard interest rate. A legitimate financial institution will be concerned about your creditworthiness if you cannot repay the loan on time.

• Time-Limited Offers:

Be wary if you receive emails or see advertisements urging you to take a loan "immediately" since the offer is for a short time. Banks provide loans at fixed rates depending on your credit history. Such pressure methods instil a sense of urgency and deceive you.

• Unsolicited Communication:

Scammers make texts, emails, and phone calls to those in desperate need of money, claiming that a loan is available right now. Such emails and texts may lead you to assume that you will receive a guaranteed loan with no eligibility requirements or credit checks. The goal of such lenders is generally to obtain your personal information. Do not succumb to such techniques.

When it comes to loans, the most important thing to remember is that if it looks too good to be true, it generally is. Unrealistically low-interest rates, little research on the lender's part, supplementary offers to enhance the deal, and other such deals are all warning flags to be aware of when selecting a loan choice.

FAQs

Q.1: Why is a credit score required for personal loan disbursement?
Ans: Your credit score demonstrates your trustworthiness to a potential lender. Your credit history validates your lender’s confidence to pay your loan obligations on time.

Q.2: How do I know if the loan is in my name?
Ans: Checking your credit record is the most straightforward approach to see if a loan has been issued on your PAN card. Your credit report will show all loans and lines of credit issued in your name.

Disclaimer: The information contained in this post is for general information purposes only. IIFL Finance Limited (including its associates and affiliates) ("the Company") assumes no liability or responsibility for any errors or omissions in the contents of this post and under no circumstances shall the Company be liable for any damage, loss, injury or disappointment etc. suffered by any reader. All information in this post is provided "as is", with no guarantee of completeness, accuracy, timeliness or of the results etc. obtained from the use of this information, and without warranty of any kind, express or implied, including, but not limited to warranties of performance, merchantability and fitness for a particular purpose. Given the changing nature of laws, rules and regulations, there may be delays, omissions or inaccuracies in the information contained in this post. The information on this post is provided with the understanding that the Company is not herein engaged in rendering legal, accounting, tax, or other professional advice and services. As such, it should not be used as a substitute for consultation with professional accounting, tax, legal or other competent advisers. This post may contain views and opinions which are those of the authors and do not necessarily reflect the official policy or position of any other agency or organization. This post may also contain links to external websites that are not provided or maintained by or in any way affiliated with the Company and the Company does not guarantee the accuracy, relevance, timeliness, or completeness of any information on these external websites. Any/ all (Gold/ Personal/ Business) loan product specifications and information that maybe stated in this post are subject to change from time to time, readers are advised to reach out to the Company for current specifications of the said (Gold/ Personal/ Business) loan.

Most Read

Franking and Stamping: What’s the difference?
14 Aug,2017 03:45 IST
45536 Views
Like 7337 7337 Likes
Check the Difference Between 24k and 22k Gold
9 Jan,2024 09:26 IST
43976 Views
Like 5961 5961 Likes
Personal Loan With Low CIBIL Score
21 Jun,2022 09:38 IST
27164 Views
Like 6235 6235 Likes
Why Gold Is Cheaper In Kerala?
15 Feb,2024 09:35 IST
1859 Views
Like 3947 1802 Likes

Get in Touch

I accept the Terms and Conditions