Understanding and Preventing Personal Loan Scams in India

The financial product has become popular in recent years among many Indians; personal loan. Of course, one cannot talk about financial instruments, in particular, about Indexed Universal Life insurance, without mentioning frauds and scams inherent in it. In this blog post, we will discuss with an analysis approach on how to identify and avoid personal loan fraud in India.

Signs that can alert of Indian loan scams

Unwanted phone calls or messages: Fraudsters might try to deceive you with a high rate of approvals or even pre-approval for loans that never actually demanded, that you submit an application. Discounts or incentives that seem unbelievable should be turned down.

No credit check Claims by lenders, which state that they do not pull credit reports on the applicants are misleading since competent lenders will carry out credit checks to determine your eligibility for the personal loan. It is advisable to be wary of a lender who demands for cash deposit in advance claiming it to be a credit check of your capacity to repay the loan and were you were not checked or the check was done poorly.

Fees up front: This is a sign which you should avoid when searching for a lender as they will ask you to pay upfront in order to close the deal. A processing fee is always charged by genuine lenders and this fee is then deducted from the granted loan and not paid in the beginning.

Websites that lack security: Check if the site you are applying for is safe, and if the SSL certificate is updated to the current one. Look at the address bar for ‘https’ at the beginning of the web address or the ‘lock’ sign.

Hurry up: Frauds will try to press you to agree to the offer before you have a chance to research or consider the loan offer. Elaborately select an option; do not be hasty. Approach compare and research offers gently.

Ways that one can protect himself or herself from being scammed.

Do your homework before lending money: Before applying for a loan, it is wise to research on the financial institution or company where you intend to borrow from. Check the online credibility of expected guest speakers. Look for evaluations, rankings, and comments from the clients.

Verify the fees and interest rates: Whatever final decision is to be made always remember to cross check and compare the interest rates and fees offered by the various lenders. This will help you in managing not to be caught in a situation where you are charged high rates of interest and hidden charges.

Check if the lender is registered: All the lending institutions currently in India or those intending to carry out their business in the country must be certified by the RBI. Before making an application for a loan make sure that they are registered and qualified to do so according to the RBI.

Report fraud: If you think that you are a victim of loan fraud, then you should immediately report it to RBI and the local police. This will reduce the probability of other people being duped into falling for the same scam.

In summary

Despite the fact that fraud related to personal loan exists in India, it is very avoidable being careful and conducting some research. Before entering a loan contract, do your homework carefully, check the registration of the credit organization, read the contract carefully before signing it. Knowledgeable is the fact that if something appears too bog to be true it most often is. For example, through the internet and mobile software, get personal loans from reliable organizations such as SBI, Union, ICICI, Axis Bank, HDFC, Kotak among others.

Note: The information contained herein is solely for educational use only. The reader shall make any decisions based on the contents and information in any part of this work solely at his/her own risk without the imputation of any liability to the author. It is mildly advised that you consult your financial advisor before making any of these financial decisions.