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You can get personal loans from a lot of places these days. If you don’t like your bank or credit union’s terms or have bad credit when applying, an online lender might cater to your specific needs.
But going online comes with a downside: It’s harder to tell a scam from a legitimate offer. To help you avoid getting ripped off, we cover the signs of a personal loan scam and what you can do to avoid them.
Use these tips before signing a contract to be sure you’re dealing with an upstanding business.
Here’s how to protect yourself from two common scams you might encounter when applying for a personal loan.
Among the most common personal loan scams are those that involve fraudsters “phishing” for your personal or financial information.
In a typical phishing scam, you visit a site or open a form that appears to be from a legitimate lender. You might even speak by phone with a caller claiming the need to “confirm” your loan details. In either case, if the scam is successful, you’re tricked into providing your National Insurance Number, bank account numbers or passwords, which a scammer then uses to steal your money or identity.
How to avoid being “phished”
A key rule of thumb when applying for a loan online is to confirm that you’re on an encrypted page. Look for a padlock to the left of your page’s URL, which itself should start with “https,” indicating a secure site. If you don’t see either, the site you’re on may not be legit.
In general, avoid clicking links in any unsolicited email or popup window. If you don’t trust the source of an email or phone call, get in touch with the lender’s customer support directly to ask about the contact.
And if you can’t confirm a lender, an offer or even loan details, walk away and look elsewhere. Better to not have a loan than risk the potential of having your identity stolen and your bank account drained.
These simpler scams are sometimes combined with phishing scams. In this case, you apply for a personal loan with a fraudulent lender that asks for you to pay a fee to cover processing costs, insure your loan or even guarantee approval before they’ll process your application.
You’re often asked to pay with a wire transfer or prepaid debit card — payments that aren’t traceable, making for an easier getaway. By then, you’re out money and potentially your identifying personal or financial information.
Scammers put a lot of work into gaining your trust so that you click, share or open what they’re pedalling. Which means that real loans are increasingly hard to tell from the fakes. In the end, knowledge is the best defence against personal loan scams.
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