Digital and technology improvements have significantly increased in the banking and financial industry. Generally speaking, it has changed the game. However, there have been several notable business scams and financial frauds in India.

An undesirable consequence has been appearing more frequently as the sector grows and attracts a rising number of participants. This worrying trend of con artists disguising themselves as reputable financial institutions is robbing individuals of their money. This is particularly true when it comes to loan fraud in India, as has become clear from the growing amount of news coverage of individuals losing money, property, and in extreme situations, even their lives to such fraudulent lending schemes and its consequences.

Warning Indicators of a Loan Fraud

To guard against fraudulent loans and lenders taking advantage of legal gaps, bear in mind the following:

Ways to Identify Personal Loan Scams

1. RBI Has Authorized Lenders

This may be the key factor in determining if a loan application is valid or not. There are hundreds of loan applications in the app store, and while they frequently tout the legitimacy of their services, most of them are scams. The lender won’t be able to impose high fees or engage in criminal activity because of the RBI’s authorization.

2. No actual address for the Lender

You should be able to visit the physical site of any lender you are considering. For safety’s sake, run it via Google Maps. It’s crucial to double check this since some companies performing personal loan scams may offer locations that are really empty lots.

If there is no indication of a physical location, stay away from the lender. In order to escape legal repercussions, many fraudulent firms are untraceable.

3. The lender forces you into taking quick action

Avoid giving in to the haste plea. Giving you an imminent deadline to sign on for a loan because the offer expires rapidly, like within a day, is one of the distinguishing characteristics of personal loan scams. If you hang up without taking immediate action, the lender could warn you that something unpleasant is going to happen, such as the suspension of your licence or the filing of a lawsuit.

Such high-pressure lending techniques might be used by dishonest lenders. It may be a ruse to force you to make a snap decision before you have time to do your homework and figure out the scam they’re doing.

4. If the Lender doesn’t have a Website or a Registered Address

Examining the lender’s website might help you identify a bogus loan application or personal loan scam. If they don’t, that can be because they are illegal or unreliable. Websites offer more than just details about the goods and services; they also reveal information about the business and its methods. You should, more significantly, determine whether the website is secure.

In addition, loan fraudsters sometimes maintain their anonymity in order to escape prosecution for their crimes. They usually don’t have a website or give a registered address as a result. If a lender lacks these vital pieces of information, it’s time to go elsewhere.

5. It appears to be unreal

A personal loan offer is likely to be false if it seems too good to be true, according to reality. Genuine lenders won’t randomly phone you and make you an alluring loan offer. Without filling out an application and allowing a hard credit check, you are unlikely to get approved for a loan with an absurdly low rate.

6. Lender is not open regarding its Fees

When questioned, scammers won’t reveal their fees or promote them conspicuously on their websites. They could also inform you that your loan application has been accepted, but then demand payment in advance. Although a few trustworthy lenders do not reveal their costs on their websites, prices should be made clear during the application process and before you sign anything.

After loan approval, hidden fees should not be accepted. The FTC advises you to avoid any business that uses this tactic, especially if they claim the upfront payment is for “processing,” “insurance,” or “paperwork.”

7. A Fake App bypasses the Documentation Procedure

False loan applications frequently attempt to ensnare users by approving loans without the necessary paperwork. According to RBI standards, any reputable app, like Money View, would always request the required documentation, such as KYC, income proof/bank statements, PAN information, and others, in order to evaluate the customer’s creditworthiness. Don’t accept loans from applications that don’t require these papers.

8. If the Lender needs an Advance Payment

Some con artists have been reported to demand prepaid debit cards, gift cards, or financial information from potential victims. The con artists typically say they want the information for insurance, collateral, or fees. Genuine financial organisations could charge a fee for your application, appraisal, or credit report, but those costs are subtracted from your loan.

Prepaid cards are a huge warning sign. It’s practically untraceable like cash, and if you’ve provided it to a lender, you can’t report it as stolen. If you give your financial information, you can make a complaint with your bank or credit union, but it can take some time for your claim to be looked at.

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