Fake Loans: Easy tips to safeguard your money against personal loan scams

The emergence of digital lending platforms has completely changed the financial services sector in India. It has become quite convenient to access personal loan offers and borrow money through your mobile phone within a few minutes. The digital lending ecosystem is rapidly evolving in India and the banks as well as the non-banking financial companies (NBFCs) have been offering customised loan products to meet the needs of customers across socio-economic categories.

However, with the mushrooming instant loan apps it has become difficult to distinguish between legitimate lending platforms and fraudulent ones. Online scams are becoming an increasing concern, with fake loans becoming one of the most common fraudulent tools by cybercriminals. The scammers are getting smarter day by day and using fake websites, social media advertisements, and phone calls to loot money from vulnerable individuals. These fake loan offers often seem very appealing, with promises of quick approval and low interest rates, making it difficult for borrowers to spot the scam.

It’s crucial for all potential borrowers to follow diligent steps for personal loan checks to avoid falling prey to fake loan offers. Let’s take a look at a few important factors to distinguish a fake loan from a genuine one.

What are fake loans?

Fake loans are scams where someone pretends to offer a loan but has no intention of actually lending money. These fraudsters usually advertise loans with promises of easy approval, low interest rates, or quick disbursements to attract people who need money. They may ask for personal information like bank account details or request an upfront fee for processing the loan. Once the victim shares the information, or pays the fee, the scammer disappears, leading to the loss of money.

A fake loan can also harm you in several ways. It is unlikely to be serviced or paid back, which can lead to a negative impact on your credit score.

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How to spot a fake loan?

Here are some things to watch out for in order to safeguard yourself against fake loans:

• Asking for upfront fees: Fraudulent lenders often ask for upfront payments before approving the loan. Real lenders generally deduct fees from the loan amount after approval, not before.


• No physical address or contact information: Authentic lenders have a physical office and clear contact details. Be cautious if the lender's website lacks this essential information.


• Too good to be true offers: If a loan offer promises unusually low-interest rates or instant approval, it's likely a scam. Always compare offers from legitimate financial institutions to ensure they're reasonable.


• Unclear loan terms: Always read the loan terms carefully. If anything is vague or unclear, it's a sign of potential fraud. Legitimate lenders make sure the terms are transparent and easy to understand.


• Unsecured websites: Before entering any personal information, make sure the website starts with "https://" and shows a padlock symbol, indicating it’s secure. Unsecured websites may put your data at risk.


• No credit check: Real lenders conduct credit checks to assess your ability to repay. If a lender offers a loan without any credit evaluation, it’s a major red flag.


• Using pressure tactics: If you're being rushed or pressured into taking a loan quickly, it is a red flag. Reputed lenders give you time to consider the terms of the loan. Scammers will try to rush you into making hasty decisions without a proper review of details.


• Limited online presence: A trustworthy lender will have a professional website and active social media presence. If their online footprint is limited or doesn’t seem credible, consider looking for another lender.


• Fake reviews: Fraudsters often create fake reviews to appear legitimate. Cross-check reviews on multiple platforms and be cautious if the reviews seem too perfect or overly positive.


• No Documentation: Be wary if the lender doesn't provide any written loan agreement or terms. Authentic lenders will always provide you with clear documentation for review or reference.

It’s always advisable to apply for personal loans through reputed digital lending platforms that have been approved by the Reserve Bank of India (RBI) or the ones who work with lenders registered with RBI.

For example, you can explore multiple loan offers up to Rs 50 Lakhs from eight lenders through the Moneycontrol app. The loans start at an interest rate of 10.5% per annum and there are no hidden charges. Moneycontrol has a robust track record of being a reputed financial service platform and you can complete the e-KYC process within the app while applying for the loan.

ALSO READ: Best Personal Loan: How to choose & key factors

How to check if there is a fake loan in your name

• Check Your Credit Report: Request a free credit report from the credit score platforms that partner with bureaus like CIBIL, CRIF Highmark, Experian, or Equifax. This report will list any loans or credit accounts opened in your name. Look for any unfamiliar loans or credit inquiries.


• Monitor Your Bank Statements: Check your bank and loan statements for any unauthorised withdrawals or loan-related transactions.


• Verify with Lenders: If you find a loan you don't recognise, contact the lender or bank listed on your credit report. Request detailed information about the loan.


• Lodge a complaint: If you discover a loan has been fraudulently taken in your name, file a complaint with your local police. You can also file a complaint with the lender.


• Notify the Credit Bureaus: Inform the credit bureaus about the fraudulent loan. They can help flag your credit report to prevent further misuse.

Final Words

It’s utmost important to safeguard your hard-earned money against fake loan scams. You can avoid falling prey to illegitimate lending apps by remaining alert against potential online scams and by following prudent financial practice while borrowing through instant loan apps. If you are looking forward to availing a personal loan, always go for genuine digital lending platforms.

Moneycontrol offers personal loans up to Rs 50 Lakhs through eight lenders. You can apply for loans in a hassle-free manner as it’s a 100% paperless application process. The loan interest rates start at as low as 10.5% per annum.