Personal loans are financial means for both the borrower to raise funds and licensed moneylender to earn interests for lending money. Unfortunately, there are people who take advantage of these means to gain from the other without the intention of keeping the agreement. These fraudulent activities often leave the victim losing a large sum of money.
Here are some of the fraudulent activities that scammers often engage in.
- Lending with High Interest Rates and Fees
Some lenders take advantage of those who take in personal loans as an option to raise funds. Often, these types of lenders will hide fees and other charges and incorporate it with other requirements. They also charge high interest rates especially to those who need the money the most. Lenders who offer low interest rates may at times adjust the rates to double to cover additional payment requirements. These adjustment creates a very high interest rate that needs to be paid.
- Personal Information Theft
Personal information theft can happen on the side of the borrower where the thief makes use of the information for illegal purposes. This is common with online lending companies who offer “Guaranteed” approval of personal loans. When making the application, the lender asks you to complete an online form indicating all the necessary information to commit illegal transactions. It is important to be wary of these lenders who try to steal personal information.
- Upfront Payment Fees
When a lender is asking to pay for fees in advance before releasing the loan amount, this is often a sign of fraudulent acts by the lender. It is rare to require fees to be paid in cash upfront before you can receive the amount you are borrowing.
- Fictional Identity
There are often applications that go through brokers that where the borrower is fictitious in character. These are often committed by brokers themselves or applicants trying to scam lenders. These fictional characters often get through because of getting shielded from credit checks from having a third party involved in the application.