Beware of personal loan frauds

Be Careful of Personal Loan Frauds

If you are approaching a reputed bank or a financial institution, then you need not worry about its reliability. But you must be aware about the role of middlemen, agents, or even some banks who are involved in personal loan frauds, particularly when you are badly in need of money or have a bad credit standing.

It is always advisable to approach a reputed and trustworthy bank for applying personal loan. These banks take substantial interest in gaining confidence of the customers. Moreover, if you have a healthy relationship with the bank since years, then you need minimal documentation and time for approval of your personal loan. But if you have a bad credit report or score or you do not share any relationship with the bank or if the bank is a new start-up, then you have to be careful while dealing with it.

You must be knowledgeable before applying for a personal loan. Hence, let us understand the personal loan frauds which can arise.

Interest rate

The most common fraud can be seen in the interest rate fluctuation. If you have a bad credit score, then banks take advantage of the situation and exceed the rate of interest much higher as compared to other banks.

Pay me in advance

Generally, banks do not ask for advance payment or any additional charges for granting personal loan. It doesn’t approve application on the basis of advance payment received by the applicant. Hence, if any bank has asked you to pay advance payment or a large amount of fees, then hold on! Do not jump to a conclusion now. Do proper research with other banks and take a suitable decision accordingly.

Phishing – popular but dangerous fraud

You may receive unwanted telephone calls or e-mail messages inviting you to apply for personal calls. All of these calls are not genuine. Hence, one must be alert about these phishing technique adopted by unethical persons. They are actually trying to get your personal information such as bank details, etc.

Do not borrow more than what you have applied for

Sometimes, you are tempted with more borrowing amount by the bank. This is nothing but to make you more liable than your actual capacity. This is not a kind of fraud but a technique to get higher interest and repayment amounts from you. For this, you should not get attracted by large loan amounts. Take what you have applied for.

Look before you sign

You must never sign blank loan documents or cheques as given by the banks. It is a common sense to read the documentation carefully before signing it.

Middlemen and agents

If you have a bad credit standing and the bank has straightaway rejected your application, then middlemen or agents can come to your rescue. But this rescue can be dangerous too. They may ask you to go by shortcuts and get more fees from you. Do not go by such shortcuts. If your application is rejected by one bank, then you can go to another bank for the same.

Thus, before applying for a personal loan, one must be aware about the frauds and threats involved in it.