Take Steps To Prevent Loan Scams

Most of us have, or will, at some point in our lives, need a loan. Financial emergencies happen all the time, or maybe you're just caught in a tough spot and you need some extra cash to tide you over until you get paid. Whatever your reason is, you have to be careful - there are companies who will prey on vulnerable people and take advantage of them in their time of need. Loan scams are ubiquitous, and anyone can become a victim, if they're not careful. Here is how you can make sure to avoid loan scams.

Research The Company Properly

Loan scam prevention starts way before you actually get a loan - you need to be vigilant even when searching for a loan provider. You see, not all lenders are created equal, and some of them will be more trustworthy than others.

What you need to do is perform a quick Google search and see if you can find any records of the company you intend to use, if they appear on the FCA register, if you can find the company history, how long they've been in business for, and of course, customer reviews. The reviews will be very telling, because they're written by real people, and they should provide some valuable insight into the way the company really works.

What to look out for: Make sure that the reviews you read are on third party sites. Never trust the reviews that appear on the company website, because they are, most likely, fake. Instead, search online for reviews and look for potential red flags, like dishonest or illegal practices, bad customer service, etc.

Read All The Paperwork Thoroughly

One of the worst mistakes people make is to not read the contract before signing it. I can see why you would be tempted: you look at that stack of papers and you start thinking of all the better things you could be doing in that time. Plus, let's face it - contracts are boring, and they never end.

But that's exactly what scammers are relying on. That's what enables them to slip in hidden clauses, undisclosed charges, and other crazy stuff that you are then on the hook for, because you never bothered to read through the contract. Or if you did, you weren't paying much attention.

What to look out for: Pay extra close attention to any charges and payments you agree to, as well as any other "services" you never asked for, but that you might be charged for.

Do Not Sign Anything You Don't Understand

The other major mistake that is surprisingly common is that people sign contracts they do not understand all the time! Again, the reasons are pretty understandable. People come in and they read this stack of papers in a stiff jargon that is difficult to decipher - and they certainly don't make it easy for you - and they don't completely understand what they're signing.

But they're too embarrassed to say so, because no one wants to appear ignorant. And they don't have the time or money to run it past a lawyer. So, they just sign, and are unpleasantly surprised later, when they get stuck with bills they didn't know they agreed to.

What to look out for: A lot of loan scams are couched in legal terms the average person will not understand. So, if there's any section that you just don't get, or terms that you can't find explanations for, it's best to pause the process until you gain a thorough understanding of what you are signing.

Any Good Resources?

Luckily, there are places where you can seek free advice, help, or counselling, so that you don't fall prey to loan scams. You can either look out for official registries , or you can even go and talk to someone if you don't understand your contract, or you feel like you've been a victim of a loan scam. The Money Advice Service and Citizens Advice can answer all of your questions.

All in all, even though loan scams are extremely common, there are ways to avoid them and prevent them. The most important thing is to be vigilant and have a good knowledge of who you are doing business with, as well as the process you are legally beginning. You can also ask for help from professionals who have experience and expertise in this regard.