According to industry experts, interest rates on personal debentures are rising after the COVID-19 pandemic. The bad news is possible scams are also on the rise. Amid the record-breaking unemployment rates, as well as the staggering economy, people are looking for personal debentures for two purposes: to consolidate their credit card debts or just to get by.
This is an excellent way to help people get them through until they are back on track. Scammers of any forms and types have taken notice. At the start of the pandemic, the FTC or Federal Trade Commission reported more than 10,000 accounts and more than $12 million in losses because of COVID-19-related frauds.
These complaints cover a wide range of financial scams or fraudulent activities. But personal loan (PL) scams have been an issue since before the Coronavirus pandemic. In 2019, the ISI or Insurance Info Institute recorded at least 40,000 reports about possible business and personal loan scams.
Fraudulent individuals will try to take advantage of the public’s needs. And in the middle of the COVID-19 pandemic that is putting the country’s economy through serious problems, these people are finding opportunities. If individuals have determined that a personal debenture or oppussingslån (renovation loan) makes a lot of sense to them, the next step they need to take is to explore some warning signs and red flags of PL scams.
Personal debenture scam red flags
There are two reasons why people could get scammed: individuals are either trying to steal their funds or trying to steal or sell their personal info. Listed below are some red flags to watch out for.
If it is too good to be true, most of the time, it is
If it is too good to be true, there is a good chance that it is. As a matter of fact, according to experts, this statement is usually true. Professionals agreed that if a loan firm has guaranteed a fast approval for the loan, there are only raving reviews on their websites, does not care about people’s bad credits, or offers a “no credit check” process, it is wise to do a lot of research before they agree to anything or sign the contract.
It might include reaching out to consumers. It is not uncommon for conventional banks to send people offer letters in the mail. But if it is a conventional bank they have never heard of and they are randomly reaching out to individuals with deals that look too good to be true, they need to proceed with more caution. It might include reaching out to people.
If people have bad credits, they should not worry
Guaranteed approvals, no credit checks, or pre-approvals seem to be popular themes in PL scams. If the lending firm is making these guarantees before checking their financial history, they need to be very careful. These no credit checks or guaranteed approvals are possible fraudulent activities. A financial institution need to do some underwriting to help them assess and price that debenture appropriately. If they are not doing this process, it is a warning sign.
Most experts suggest that people should be very careful of advance-charges scams. With some PLs, individuals will need to pay for the application or origination charges, but that is going to come from the debenture. In short, any charges associated with the debenture should be covered by the credit itself. If individuals have to come up with their own money, they need to walk away immediately.
A Simple Tip: The person’s state finance department needs to maintain registries of approved lending firms. Borrowers should check it out first before everything else.
These charges are usually worded in legit terms like processing or application fees. But these charges are anything but legit and usually ask individuals to do things that may seem pretty odd, like buy a prepaid card. Legit PL lending firms do charge something in advance.
It is called origination fees, and that is usually normal – but it is taken out of the person’s debenture proceeds. On the other hand, advance-fee debentures are not legit. People should not be giving anyone their hard-earned money out of their pocket before they get approved.
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Lack of organization info
Another red flag of a possible debenture scam is the lack of info about the lending firm. A legit financial institution like conventional banks, credit unions, or online lending firms usually has addressed and enough contact info on their website. If the lending firm has no info about their firm other than their URL, do some additional digging before they provide them any personal details.
Lastly, people should not bend to it if lending firms ever apply pressure. No organization or individuals should pressure borrowers if they are legit financial institutions. People should make sure they are not feeling pressured to make decisions or disclose personal detail info like bank account numbers, debit or credit card info, or Social Security numbers. Reputable financial institutions will not force people’s hands or rush the personal debenture application process.
How to check debenture providers?
Make sure websites are secure
Check the firm’s website to see if it has HTTPS. An HTTP without an S is not a secure website to handle personal info collection. People want to ensure that the website is very secure since they will be giving personal details.
Check these companies out
A reputable lending firm should have details about themselves on the Internet. If they cannot find any details on these firms or their products, they need to walk away immediately. Professionals recommend individuals should do some Google search with the company’s name and the words “scam” or “fraudulent activities” and see what comes up.
Read online reviews
Borrowers should do some online sleuthing. Whenever they are looking for a financial product, they need to read online reviews, as well as shop around as much as possible. Check out every review sites you can find to make sure other clients have not been mistreated by the lending firm you are considering. Individuals can check out the Better Business Bureau website for more information.
Ignore shady offers
As experts emphasized, people may get various offers that sound too good to be true. They need to ignore these offers and not fall into their trap of waived credit check promises and free guarantees.
Check companies through government platforms
Federal government resources and free of charge and there to help people avoid any fraudulent activities. Individuals can check their possible lending firm through these websites by typing the company name into the search bar. If there are small changes against the firm, one of these websites will report it. Experts recommend checking:
- The American Bankers Association
- The United States Public Interest Research Group
- The Consumer Financial Protection Bureau
- The Federal Trade Commission
Check the state’s registration resources
The borrower’s state finance department needs to maintain registries of approved lending firms. With PLs, it is about verifying the financial institution and making sure that they are appropriately registered to the right agencies. State resources differ from state to state. Some places issue lending firms licenses; others register them to the appropriate government agencies.
Individuals should check out their state’s system and ensure that the financial institution they are considering checks out. For instance, a person searched for New Jersey state license lending firms and reached the state’s Financial Services Department. Here, they can search for relevant information on licensed financial institutions like conventional banks, credit unions, or financial institutions in New Jersey.
Shop around and compare prices or rates
People should compare rates and prices with a couple of lending firms to make sure they are getting the debenture funds they need with the best and lowest possible interest rate available in their area. With any lending products they shop for, people should shop around. They should not limit themselves to the one offer they find on the Internet.
Not only does checking any financial institutions like traditional banks, credit unions, or online lending firms individuals are considering will protect them from PL scams, but it can also help them get the best and lowest interest rate available in their area.
Borrowers should always watch out for financial institutions asking for the advance money, upfront payments, or pressure them, especially if they cannot find many details about their firms. It always pays to go with a financial institution individuals know they can trust when in doubt.
Simple online research can save people a lot of money, funds, and energy when it comes to PLs. It can also help them avoid any fraudulent activities along the way. It also helps to ask individuals that have previously got personal debentures about their experience with their financial institutions.
These loans are a million- or billions-dollars business, which is why it attracts scammers of all forms or magnitudes. It is best to do everything in your power to avoid these fraudulent firms or individuals to make sure you get your loan intact.