Despite the constant crackdown on sham loan companies, credulous borrowers are found to have been defrauded every other day. Although online lending has made borrowing convenient, it has also increased the risks of fraud. The government is taking action against fraud, but you should also be discreet.
Before you apply to a company for a loan, you should check whether the company is legit. Do proper research so you do not end up ruing the day down the line. Finding whether a lender is honest or reliable I quite challenging because loan scammers act in disguise so smartly that it is hard to detect. Even spotting a minor loophole is not a cinch.
There are a few ways you can use to find out whether a lender is reliable or not, which are discussed below.
Does the lender run a credit check?
No lender is permitted to loan you without running a credit check. Affordability checks involve the perusal of your credit report and repaying capacity. If a lender is offering you loans without credit checks, it should raise alarm bells. It is crucial to know your past payment behaviour so that a lender can get to know that without peering at your credit file.
Likewise, it is a red flag when a lender gives you 100% guaranteed loan approval. It is not feasible practically. No lenders can assure you that you will get signed off on without affordability checks, which are carried out only after putting in an application formally.
You should not apply to companies that say you can get a loan approved without a credit check. There are some lenders that may say applying to them will not have an impact on your credit file. It might mean that they will run a soft credit check, and for that, they do not necessarily have to keep you in the loop.
Do they have the correct physical address?
Since they are online lenders, it does not mean that they will not have a physical address. They must be operating from somewhere, so it is intrinsic that they have a registered physical address and contact details. Make sure that the contact number is genuine and that they professionally handle your queries.
Look for the “contact” page, where you can find an email address, a phone number and a mailing address. If the company has a genuine physical address, it should be listed on Google. Google Maps will show up to let you know the exact location of the loan company.
Scammers will not like to be found, so chances are they do not use genuine physical addresses and contact details.
Does the lender offer transparent loan deals?
Legit loans in Ireland are available with flexible terms and conditions. Further, all those loan terms will be absolutely transparent. No ambiguous terms will be used in the loan agreement to swindle you. Look out for the following information in the contact:
- The borrowing amount
- Interest rates, APR
- Early repayment fees and late payment fees
- The repayment length
- The cost of the loan
- Default charges
Do not sign the agreement without careful reading of all terms and conditions. If you have a doubt, a lender is responsible for resolving your queries. If you find that the loan provider is dodging your queries, you should immediately understand that the company is not genuine. If you have any faintest doubt about the credibility of a lender, you should not sign the agreement.
Loan scammers do not prefer to be transparent. They hide information about fees and charges. If a lender charges upfront fees, do not believe them. They could be fraudsters. Look for the interest rates. Loan scammers charge outrageously higher interest rates to trap you in debt.
Unlike reliable lenders like my lender loans in Ireland, loan scammers do not let borrowers pay before the due date, and when they do so, they charge early repayment fees. A reputed and trustworthy direct lender will not stop you from paying off the loan before the due date and never charge a prepayment penalty.
Find information about the loan company on Google
You can get to know about the scam by checking information about the lender on a website. Try to find out what experience real people had with the company. They will probably be able to tell you genuinely and in detail.
Find out an independent review. Website testimonials might not be genuine because no bad review is approved. If you want to find out about the ethical practice of the lending company, you should check reviews on social media sites and Trustpilot. There are several other review sites other than Trustpilot, so you just type the name of the company in the search bar like this “XYZ reviews”. You will get various results. This will give you an indication of whether the company is real or not.
Do not assume that there should not be any bad reviews. Bear in mind that no loan company can be all things to all borrowers. The company is fair as long as the rating is not less than 3. Do not forget to note if the company has apologised or made an attempt to get back to those who showed disappointment in their review.
A genuine and trustworthy company will certainly reply to their comments. If you notice that there has been no response from the company at all to any of the posted reviews, you should immediately understand that the company is false.
Do not ignore checking the reviews and comments about the company on social media sites as well. Use online scam detector tools that allow you to check the validation of the website.
The final comment
You can easily know whether a lender is legit or not. Try to scoop out information from the internet about the company. A trustworthy lender cannot approve without an affordability check. They will have the correct email address and other contact details. Above all, they will be transparent about their terms and conditions.