Upon hearing news of loan app scams, you may think that such an incident can not happen to you. No matter how careful you are, this can happen to anyone, especially if you are:
- Looking for quick financing for urgent needs
- Not vigilant about the app or the lender and the loan terms
The best thing to do is to be alert to the warning signs. With the knowledge of how fake loan apps function, you can protect yourself and safeguard your finances.
What are Fake Loan Apps?
These apps are built by fraudsters impersonating genuine lenders or with fictitious names of digital lenders who do not have the licence to offer loans from the Reserve Bank of India. The way they function may be:
- To lure you towards accepting a fake loan offer and pay a processing fee, which scammers may keep for themselves without actually offering you a loan
- To get you to share personal financial documents and commit identity theft with them by taking a credit card or loan in your name and not repaying it, which causes financial losses to you
How to Identify Them
Precaution is better than cure. Therefore, it is best to look for the following signs before you apply for a personal loan on an app to detect fraudulent lenders.
Lack of Address
If the lender doesn’t have an online presence or official address, it can be hard for authorities to track them. This is why this should be an indicator they may be fake and looking to misuse your identity.
Random Loan Offer
If you are getting a loan offer from a bank or financial institution even without applying, it is most likely a scam. This is because lenders only give pre-approved offers if you are an existing customer and they have your credit history. So, it’s good to investigate the reason for such unsolicited loan offers.
Too Good to Be True
Another common strategy used by scammers is to give enticing offers that seem unbelievable. This can be guaranteed loan approval or a very low interest rate compared to the standard market rate.
Upfront Fees
To extract money from victims, scammers may ask you to pay a large fee before starting the application process. As most reliable lenders don’t ask for such a fee, take this as a warning sign.
Pressure Tactics
Another thing to look out for is if the lender’s representatives are constantly calling you to complete the process quickly. This may be so that you don’t get enough time to verify the reliability of the lender and check the loan offer carefully.
Missing Terms
Another red flag is if they don’t mention the loan details, such as fees and charges clearly.
Tips to Stay Cautious
Now that you know what the warning signs are, here are a few ways to ensure safety.
- Verify the Lender: Read the customer and app reviews online before you apply for a loan to ensure that the lender is trustworthy and offers good customer service.
- Carefully Read the Terms: Read all the terms and conditions on the lender’s website carefully to avoid any risk. Ensure all charges are mentioned clearly.
- Avoid Falling for Random Deadlines: A reliable lender will never ask you to make haste and apply without analysing all the factors, be it on the loan app or in person.
- Check Your Credit Report: Periodically review your credit report to ensure there are no unauthorised loans in your name. If you do find any, raise a dispute with the credit bureau and lender.
- Authenticity of Communication: Lenders will only reach out through reliable modes of communication, such as email, and will address you with your name or account number. Getting messages on Telegram or other social media channels could be signs of a scam.
Following these tips, you can protect yourself from falling for fake loan apps and scams. Sometimes, scammers already have your details and use them to get loans as well as credit cards in your name. Since they are linked to your PAN card number, they can impact your credit score negatively.
To protect yourself, the best strategy is to check your credit report periodically. In case you find any unauthorised loan or credit card, you must report it to the credit bureau. To make this process easier, you can rely on the OneScore App. This app makes it easy to check all your credit accounts in one place. It also helps you raise a dispute in case you see anything suspicious.
What’s more, you can check your credit score and report from CIBIL and Experian for free all through your lifetime. You can also benefit from personalized insights to increase your score and get pocket-friendly terms on your next loan.
If you are looking to get a personal loan from a reliable lender, the OneScore loan app has a solution for that as well. With the OnePL facility, apply for a loan of up to ₹5 lakhs at an interest rate starting at 12.5% p.a. with quick disbursal and no documents required. Download the OneScore App to take care of all things related to your credit health.