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You will see such offers commonly on your TV screens, in newspapers, and mostly on your laptop or phone screen. The offers are sometimes so attractive that even a finance manager may not ignore them. Getting trapped in a loan scam is quite easy. Here is a quick guide on how to avoid loan scam.
Understanding Different Types of Loan Scams
Low Interest Rate Bad Credit Loan
The most common sign of a loan scam is the low interest offer on bad credit loan. The lender always needs a security or collateral to work as the guarantee of the loan. The borrower provides their good credit score to prove their eligibility for the loan. Most of the lenders do not provide general loans to people with bad credit. However, some loans like payday loans, guarantor loans, emergency loans, wedding loans, and such are offered to the borrowers with bad credit, but with high interest. If someone offers you loan with low interest rate on bad credit, it is most probably a scam.
Phone scams with Deals
You may receive a call or an email, which says that if you get loan from them, you will sign up for a deal of free vacation trip or a fancy car. The lenders provide you loans to avail profits as interest. The borrowers need to negotiate to reduce the interest rate. This simple means that a lender would always want to earn high profits. If they give a free vacation or fancy car to their clients, they will most probably lose their profits. This is why, any such offer is not reliable, and is probably a scam.
Loan Fee Frauds
Sometimes, it is difficult to track a scammer. Many times, the lenders offer you lucrative loan deals that seem to be authentic ones with high interest amount. Later on, the lenders call the borrowers for repayments and may threaten to take the borrower to the court. Remember that you have signed a contract with the lender for repayment plan. Make sure to inform your local government if the lender threatens you or abuses you.
Pay to borrow Loan
The lenders may take benefit of your bad credit and ask you to pay some amount to pay the loan. It is clearly a scam and must be reported.
If you find any such loan scam in your surroundings, make sure to connect with your local government. The complaint numbers are given on the website of Financial Conduct Authority or your local government website. For example, the citizens of Westminster may visit the government website of Westminster for bogus scams.
As a responsible citizen, it is your responsibility to report a scam to your local government so that the government may take prompt actions to secure other citizens from the fraudsters.