Payday loans, cash advances, personal loans or online loans in general are a lifeline when you have a cash emergency or simply need a few hundred dollars to see you through to payday. These loans are typically processes within a day and don’t usually require good credit making them very accessible to virtually anyone with a regular income.
The truth is not all online lenders are legitimate. It is your responsibility to do due diligence and ensure that the one you are borrowing money from is reputable. Below are a few common signs of an online loan or lender scam.
No Financial History Check Whatsoever
There are many loans accessible even to people with bad credit. That being said, the lender still needs to make sure that you can pay back the loan which is the very basis of the business. Be very weary of any lender who doesn’t investigate your payment history, verify your employment or some other investigation of your financial situation.
This red flag is especially true if the lender asks for upfront payments to process the loan. You can expect any legitimate lender to do some background investigations into your finances to ensure that you can actually pay back the loan.
Isn’t Registered In Your Province
Visit the lenders website and check which provinces he operates in. if you have any doubts, check a financial regulation website with the lender’s business name and see what comes up. Any loan provider who doesn’t list his areas of operations is suspect because this is standard practice even from a marketing perspective. Also make sure that the lender operates in your particular province and has contact information available on the website.
You Need a Prepaid Credit Card
It is normal for online lenders to ask for bank details but if you specifically need a prepaid credit card to receive a loan, think twice about working with the company. any charges made on your card by the company may not be traceable. If the lender asks for credit card for collateral, frees or insurance, take this as a warning sign that you are about to get scammed. Many loan providers charge application fees, credit report fees and so on but this amount is typically deducted from the loan you are going to receive.
A secure website is easy to tell, it usually has a padlock icon anywhere on the website where you have to enter your personal information. Any warning letting you know of an expired security certificate or other security issue should be your cue to look for another lender. Also make sure that the website address starts with ‘https’ otherwise leave the site immediately. Any site that is not secure isn’t one you would want to do business with especially if that includes providing your personal information.
You have a responsibility to make sure that you are dealing with a reputable vendor. Fortunately, most vendors are legitimate and offer quick loans to get you out of a sticky financial situation. Make sure you read and understand all the terms of the contract before assenting to anything.