Thwarting Predatory Schemes on Unsecured Personal Loans

During your eleventh-hour of financial need, it may become difficult to distinguish an honest lender from a predator. When a lender is saying all of the right things that make you want to sign on the dotted line, your normally sound judgment can start to show some cracks.

And consumers are not immune to falling for potential loan schemes.

In July, 33 people were charged with a 62-count indictment that targeted more than 2,000 loan application victims who lost a collective $2.7 million. The fraudulent plot involved having numerous websites and search engines direct unsecured personal loan applicants to fake financial companies.

Additionally, consumers are presented with increasing opportunity and awareness in turning to personal loans, which can make them vulnerable by default. Research firm Mintel Comperemedia revealed that Americans received 424.8 million personal loan offers in the mail last year, compared to just 290.5 million in 2010.

The demand for personal loans combined with the possibility for fraudsters to capitalize on these borrowing situations underscores the need for consumers to be vigilant. While Click N’ Loan is dedicated to the utmost transparency and connecting you to credible lenders, you can never be too careful.

Employing these practices can be your first layer of defense in protecting your financial health.

Verify Lender’s Existence

A good personal loan lender has nothing to hide, and will happily oblige you with essential contact or company information that corroborates their legitimacy. But it’s equally important not to take the information at face value.

And like in the July indictment, clever predatory lenders may use a copycat name that mimics a larger, well-reputed institution.

Once you obtain the lender’s phone number, website and address, do a little detective work. Call the number and check the website for trust indicators (like the address bar’s lock icon, or security certificates in the footer).

Because a fraudster can supply you with any random address or P.O. Box, don’t be afraid to bust out the street view of Google Earth.

Devil in the (Lack of) Details

While your first priority may be to discern what’s detailed in your personal loan agreement, it’s what’s not written that can get you in trouble.

Unless your paperwork thoroughly outlines your principal loan amount, interest, and additional fees, your giving that possible predator more wiggle room to fill in the blanks of your loan terms.

Every dollar you’re responsible to repay should be disclosed right off the bat. Never sign anything that’s vague in terms, not set in stone or mutually agreed upon.

Know Your Rights

When you’re not the finance expert, it’s all too easy to hang on to a lender’s every word and nod in agreement. Between interest rates and credit scores, separating fact from fiction becomes tricky.

Fortunately, federal regulations determine how lending institutions can treat you. Among the Federal Trade Commission’s (FTC) guidelines:

• It’s illegal for a lender to promise a loan by phone and ask for any form of repayment prior to delivery. A phone-only lender is frequently a surefire sign of an unscrupulous situation.
• A legitimate lender won’t guarantee a loan. Without collateral, unsecured personal loans require a peek into your credit to establish your borrowing habits and ultimately, your interest rate.
• All lenders are required to be registered in their states of operation. Registration doesn’t always certify smooth sailing for borrowers but the FTC notes that it can “help weed out the crooks.” You can verify registration through your states Attorney General’s office.

While your financial demands for an online personal loan may seem great, don’t rush into the borrowing process. Procrastination and urgency can breed mistakes, so it pays to do your research.

Start researching lenders today at Click N’ Loan using our best practice tips.

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