When you get an email or visit a website with an offer of a personal loan with a low or zero interest rate and no credit check, watch out – it could probably personal loan scams.
By: Phoenix Lee/
Legitimate lenders don’t send random emails or personal messages to your phone inviting people to borrow money at a very low interest rate or with no interest at all.
Tips for Avoiding Personal Loan Scams
Some loan scammers will set up websites or provide fake articles and reviews that outline the loans they offer. They will usually offer a quick and easy loan approval process, a very low interest rate, and a guaranteed right to cancel. Bad credit isn’t an issue. Scammers tell borrowers they can get a loan regardless of their credit history.
It might sound legitimate, but it probably isn’t. Most personal loan scams are either out to get your money by charging you a fee upfront for the loan or they want to get your confidential information for identity theft.
Personal Loan Scams Warning Signs
- Email messages that contain spelling, capitalization, punctuation and/or grammatical mistakes.
- Borrowers are asked to transfer money before getting the loan.
- There is a tax or fee required to get the loan.
- The interest rate is far lower than that offered by any legitimate lender.
- You are offered a free period (like a year with no payments) before you have to begin repayment of the loan.
- The company says that they don’t use credit checks and will lend out money regardless of any financial problems in the past.
- Borrowers are told that they need to make a decision quickly, or they will miss out.
To avoid getting trapped in personal loan scams, check out the lender
Ask the lender questions to check their legitimacy. Key questions you should pose include inquiring about the name of the company, its business address, licensing information, and registration. If their customer service representatives ignore or avoid these questions, it is probably a scam.
Also Google the “[company name] + scam” to see if there are reports of scams related to the lender.
Tips for Avoiding Personal Loan Scams
Never send your NRIC or passport number, credit card, or bank account details via email or enter them into a website that you aren’t sure is legitimate. The links contained in the email can also be fake, and it may not be obvious that you are being sent to a different website than that of the real company.
Most legitimate loans will not require an upfront payment. It is illegal for companies in the Singapore to promise a loan and ask for payment before its delivery. No legitimate lender will guarantee approval before you apply or before they have had your credit status checked.
The best advise anyone can get when faced with financial crunch is to cope with cash flow without borrowing. Before you are late on a rent, mortgage, or utility payment, speak with the creditor. For non-interest bills, such as utility or telephone bills, ask about making payment arrangements. Ask to delay payment until your pay arrives or set up a repayment schedule that stretches out payments.
Those in financial crunch may ask your friends or family to lend you money. Remember that a written agreement to repay the loan can help avoid family strife later. Licensed money lenders who charge no more than 4% interest per month on the amount you have borrowed, are another source for those under financial stress.
But before you approach a licensed money lender, consider other alternatives, such as the various financial assistance schemes offered by various Government agencies. As you are legally obliged to fulfil any loan contract you enter into with a licensed moneylender, consider whether you are able to abide by the contractual terms, bearing in mind your income and financial obligations.
Borrow only what you need and are able to repay. Be mindful that if you are unable to meet the contractual terms, the late payment fees and interest payment will be a financial strain not just on yourself but also on your family. The law requires moneylenders to explain the terms of a loan to you in a language you understand and to provide you with a copy of the loan contract. Make sure you fully understand the terms of the contract, in particular, the repayment schedule, the interest rate charged and the fees applicable.
Regardless of how much of a financial crunch you are in, you should always shop around different moneylenders for the most favourable terms. You should not rush into and commit yourself to a loan until you are satisfied with the terms and conditions.
How to Secure Personal Loans Quickly
If you are in a financial crunch and are searching for personal loans to expand your business, the loan consultants at iCompareLoan can set you up on a path that can get you a it in a quick and seamless manner. Our loan consultants have close links with the best lenders in town and can help you compare various loans and settle for a package that best suits your needs. Find out money saving tips here.
If you are looking for a new home loan or to refinance, our Mortgage brokers can help you get everything right from calculating mortgage repayment, comparing interest rates all through to securing the best home loans in Singapore. And the good thing is that all our services are free of charge. So it’s all worth it to secure a loan through us for your business expansion needs.
Contact us for advice on a new home loan.