12 Apr How to Spot Scams When Applying for Loans

When you need a loan, the last thing you want is to get scammed. After all, you’re applying for finance for what’s important – whether that’s a house, car, studying, medical issues, or anything else. Spotting a scam can save you time, legal fees, and unnecessary stress. Spotting a scam early keeps your cash where it belongs: with you.

It’s also important to know when a loan is a scam to protect your personal information. They often ask for sensitive information like your ID number, banking login details, or proof of income. This makes stealing your identity easy and can cause irreparable damage to your financial and personal life. When scammers get your banking details or sensitive information, it’s easy for them to create fraudulent debt in your name and create loan regret.

In this post, we discuss how to spot scams when applying for loans and why it’s crucial to keep yourself safe from scams.

How to Spot Loan Scams

Every year, loan scammers get more sophisticated, but they follow the same patterns, including guaranteeing approval without checking your credit, asking for upfront fees, having no physical address or verifiable contact information, using high-pressure tactics, asking for personal information too soon, and having poor grammar or spelling skills.

Guaranteeing Approval Without Checking Your Credit

Guaranteeing loan approval without checking your credit record is called reckless credit and is illegal. The National Credit Act mandates that all lenders must conduct an affordability assessment and check for derogatory marks (such as sequestration, an administration order, or debt review) before granting you credit.

Asking for Upfront Fees

Scammers often ask for a “processing fee,” “insurance,” or “admin charge” before giving you the loan – real lenders deduct this from the loan amount after granting you credit.

No Physical Address or Verifiable Contact Info

If your lender doesn’t have a physical address or contact details that work, run. You should also avoid using their website if it looks like it was built in the late nineties or its links don’t work – real lenders ensure their website looks professional and trustworthy.

Using High-Pressure Tactics

Fake or unsavoury lenders use high-pressure tactics, such as describing low interest rates or no fees as a “limited time offer”, “today only”, or “last chance”. Real lenders don’t do that and instead campaign that they’re trustworthy and in it for the long haul with you.

They Ask for Personal Information Too Soon

You shouldn’t be giving away your banking details, ID number, or a payslip before you have a comprehensive understanding of the loan you’ve taken out and you’ve verified the lender. You can do this by looking up their NCR number on the National Credit Regulator’s website.

They Communicate Poorly and Have Bad Grammar

This is one of the most recognisable signs that a loan offer is a scam. If their marketing content or communication is written with a poor understanding of syntax, no spelling skills, or as if they don’t communicate in English well, be careful!

Trust Loan Wave

Know that you can trust Loan Wave. Our application process asks to check your credit record, we don’t request upfront fees, we don’t use high-pressure tactics, ask for personal information like payslips before offering you a loan agreement, and our marketing material and communication are written professionally. To learn more about the loans we offer, apply today.