Personal Loan Scams – How to spot and save yourself

Personal Loan Scams are one of the biggest problems these days. There are many apps and websites that offer quick personal loans (often of small amounts) with the least paperwork.

Personal Loan Scams – Brief Intro

For any loan, including personal loans, there are licensed financial institutions (banks and NBFCs) that can offer your loan. This license is provided by RBI (to regulate the financial industry). This means these lending institutions need to follow certain rules and regulations, including completing KYCs to provide loans.

Now, sometimes due to any issue (like a low CIBIL score or no score), few people are not able to get loans as per their needs. Usually, in dire situations, getting loans from family members or even non-regulated lenders works in our society. But this requires them to feel vulnerable about taking loans like this.

This is where these sites and apps are taking advantage. They offer personal loans of small amounts with no to very little paperwork.

Common Types of Personal Loan Scams

  1. Fake Lenders and Apps: Scammers create fraudulent lending platforms and apps that mimic legitimate ones, luring individuals with promises of quick loans at low-interest rates. These often ask for upfront fees or personal information for fraudulent purposes​.
  2. Phishing and Identity Theft: Scammers use emails, SMS, or phone calls pretending to be from genuine financial institutions to gather sensitive personal and financial information​.
  3. Advance Fee Frauds: Victims are tricked into paying fees before the loan is processed, usually through untraceable methods like cryptocurrency or gift cards​.

How to Identify and Avoid Scams

Verify Lender Registration: Genuine lenders must be registered with the Reserve Bank of India (RBI). Always check the RBI’s website to confirm if a lender is registered​.

Review Loan Terms Carefully: Be wary of lenders who do not disclose loan terms clearly or who promise loans without credit checks. Legitimate lenders provide detailed agreements and do not require fees upfront for loan approval​.

Secure Websites and Payment Gateways: Ensure the lender’s website is secure (look for “https” in the URL) and does not request sensitive information like bank account or credit card details upfront.

Exercise Caution with Unsolicited Offers: Be skeptical of unsolicited loan offers, especially those that pressure you to act quickly​.

What to do If You Suspect a Scam?

Contact Your Bank: If you suspect a scam or have inadvertently provided financial information, contact your bank immediately to block any unauthorized transactions.

Change Passwords and Monitor Accounts: Update your passwords and monitor your financial accounts for any unusual activity.

Awareness and vigilance are your best defenses against personal loan scams. Always verify the credibility of a lender before sharing any personal or financial information.

Scroll to Top
× How can I help you?