Borrowing funds from a lender is one of the most common ways to fulfill your financial needs. Earlier, people visited banks and other lenders to obtain funds for financing a wedding, buying a car or a home, etc. Today, most people use digital lending services to obtain loans online. Considering the benefits of digital lending like quick loan approval, easy application process, and more, this way of getting funds has become more popular.
However, with the rise in digital lending, even the cases of lending scams have taken a steep rise. In loan fraud, the borrower might not know that the other person is using their personal or financial information. Scams like phishing attacks, fake loan proposals, identity theft, etc., often make the borrower victims.
Tips to Avoid Digital Lending Scams
In India, many types of scams have been like identity theft, false documentation, promises to offer more investment returns, loan refinancing, asking for advance payment, and more. One of the most common scams is when the fraudsters take loans on false accounts using the identity of non-existent borrowers.
Here, we suggest the best methods to avoid getting into loan scams.
1. Lender Investigation
Before taking loans from a lender, it is essential to verify all the details. Firstly, check whether the lender has a proper accreditation. If the lender is legitimate, their name will always appear in the list of approved lenders. Read the testimonials online and invite customer reviews about the lender. Do not ignore reading what kinds of complaints the clients have written about them. Read all the details on the lender’s official website, like the types of loans offered, interest rates, processing fees, hidden charges, and more.
2. Careful Signature on the Paperwork
Borrowers who carefully read all the loan documents’ terms can avoid getting trapped in digital scams. You have to be vigilant while agreeing to the loan terms. It is critical to read the documents and verify the loan paperwork. Check loan agreement details before you sign them. Read all the terms and conditions. Without making sure that it does not contain any confusing demand or fees, complex repayment plans, and other anomalies, you should not go ahead.
If unsure, please get in touch with your lender to clear your doubts.
3. Receipt Acknowledgement
When you pay or send any important papers, confirm the same with your lender. This is important to ensure that your trusted lender has received your personal and financial information and has not gone to any fake online link.
4. Be Wary of Lender Asking Excessive Information
You can smell something fishy if the lender asks for excessive information that might not be related to lending. For example, if you get a call where the person is asking for passwords, OTP, PAN or Aadhar numbers, bank account details, ATM PIN, etc, you should not provide them. It may be not your lender but someone pretending to be. The scammers may use this information to carry out scams and frauds.
5. Do Not Click Random Messages
Imagine getting a random SMS on your mobile that promises you a loan at the lowest interest rate without submitting any paperwork. For example, you receive a text saying that you are eligible for a loan and to avail it, you need to click on the link.
Please do not click on any random link unless you know it has come from your verified lender. One of the best ways to avoid getting into scams is to download your lender’s app. Ask for the app link from the lender. Make transactions only on the app and not over any mail or a message. Sometimes, the fraudsters create a fake link address, which resembles the genuine lender website very closely.
6. Lender Asking Up-Front Costs
This can be one of the ways of loan scams. The lenders do not ask the borrowers to pay the upfront amount or fee before lending the loan amount. The borrowers must make payments only when the loan is disbursed to them. They might also subtract the costs, like processing fees, late penalties, etc., from the loan amount. So, if the lender asks for money before you get the loan, it will likely indicate a scam.
7. Don’t Give Up Under Pressure
Some lenders create pressure on the borrowers. This technique tempts consumers to make hurried decisions without thinking about them. For example, if the lender is putting pressure on you to sign the document without allowing you sufficient time to read it carefully, it may mean they are trying to dupe you.
Reputed lenders provide enough time to the borrowers so that they can read and assess the loan terms, papers, etc. They also entertain the customers’ requests like queries, concerns, etc. and answer the same patiently. So, be cautious of the lenders trying to put undue pressure on you.
8. Make Transactions on a Protected Network
Use only a secure network while applying or signing up for digital loans. This will avoid exposing your crucial personal and financial information to the scammers. The phishing attacks have become very common, where the fraudsters try to access your account illegally. You should use two-factor authentication and create strong passwords.
Wrapping Up
Levying these tips can safeguard you against loan fraud and prevent you from suffering financial difficulty. Awareness of what is happening around you, staying alert, investigating the lender, and reading the documents carefully before signing can prevent scams.
FAQs
1. Which scams happen in digital lending?
Ans. The frauds include identity theft, phishing attacks, fake lending, hidden fees and upfront charges, pressuring the borrowers, etc.
2. What precautions can I take to avoid scams while taking digital loans?
Ans. Researching about the lender, reading the papers carefully, being aware of fees, not succumbing to pressure, using secure networks, etc., can prevent scams.
3. What to do if I become a victim of a digital lending scams?
Ans. If you become a victim of a digital loan scam, you should immediately speak to your bank or concerned authorities. They will freeze your funds and prevent the same from reaching the scammers. Show the messages or website interactions to the cyber cell.
4. How to select a genuine lender for digital loans?
Ans. Firstly, know that the lender is registered. Research the interest rates, processing fees, additional fees, and penalties. Check if the same is too low or too high. Both can indicate a scam. Read online reviews and testimonials.