Applying for a personal loan? Don’t fall for these 5 common scam tactics

Personal loans are now more accessible and speedier because to India’s explosion in digital lending. However, convenience carries some risk. Fraudsters are increasingly employing phony applications, texts, and unrealistic offers to take advantage of consumers looking for quick loans. Despite frequent warnings from banks and financial authorities, many borrowers continue to fall into the trap. The best defense is being aware of the warning symptoms.

Here are five typical loan scams along with helpful tips for avoiding them.

IMPOSSIBLE LOAN OFFERS

Scams sometimes involve loans with incredibly low interest rates, little documentation, or assured acceptance. Without fundamental checks, no legitimate lender will approve funds. When something appears too good to be true, it usually is. For everyone, real lenders adhere to a rigorous procedure.

UPFRONT PAYMENT DEMAND
Reliable banks and NBFCs never request payment from clients prior to loan disbursement. Processing fees and costs are never collected up front; instead, they are always subtracted from the loan amount. Consider it a warning sign and leave if someone requests a “advance fee,” “insurance charge,” or “verification payment.”

The lender is not registered with RBI.

Always verify whether the lender is a registered Non-Banking Financial Company (NBFC) or a bank with RBI approval. Avoid them if the RBI database does not contain the name. Before proceeding, you can also get clarification by contacting the RBI or the Ministry of Finance.

REQUESTING SUSPICIOUS APP ACCESS OR PERSONAL DATA
During calls or chats, scammers frequently request OTPs, bank passwords, PANs, and Aadhaar. Additionally, a lot of fraudulent loan apps want access to GPS, contacts, messages, and images. Financial fraud, identity theft, or even harassment may result from this. Such permits won’t be requested by a legitimate lender.

MANUFACTURING URGENCY
Classic pressure messages include “Last day to apply,” “Loan will be cancelled if not paid now,” and “Limited slots available.” Sincere lenders give you time to review conditions, weigh your options, and come to a conclusion. Never go quickly.