Things to look out for to prevent loan fraud

Protecting yourself from loan fraud

The current economic climate has made it increasingly difficult for people to obtain loans and, as a result, they can become desperate for extra cash. Unfortunately, fraudsters prey on the vulnerability of these people and target them with the lure of an easy and accessible loan that really is too good to be true. Read on for our tips to protect yourself from loan fraud.

TIP 1

If something sounds too good to be true, it usually is. If you are offered a loan no questions asked, then be wary.

TIP 2

Some companies are taking upfront fees for credit brokerage services (loan arrangement). If you pay this fee to a credit broker you are entitled to a refund of this money (less £5) if a loan is not taken out within 6 months of the fee being charged or if you cancel your arrangement with the broker. The Citizens Advice Bureau has warned that these companies are often persuading consumers to give them their banking details. Consumers are then offered little or no service in return and are unable to get their money back. If this happens to you, complain to the company first, then if you do not get a satisfactory response you can complain to the Financial Ombudsman Service or your local Trading Standards.

TIP 3

Never give your personal details to anybody over the telephone that you were not expecting to speak to. If a company calls you, they should already have the details you supplied them with. Answering a few data protection questions to companies who already hold your details such as your name and date of birth is ok but never disclose your bank account number.

TIP 4

Don’t pay the first ‘loan installment’ over the telephone. It is unlikely you will see this money
again. Also, this provides the fraudster with your bank details, which they can reuse. Direct debits can be set up with legitimate lenders with the first and subsequent repayments being taken at agreed times of the month.

TIP 5

Don’t be tempted by unusually long repayment terms. Although initially attractive, on closer inspection many people end up paying a lot more than they expected over such a long period.

TIP 6

Do your research. There are so many loan companies out there so use the Internet to determine the best deal for you, check their credentials and check existing customer reviews. Call the number they provide to check that it exists and have a chat with the advisor about what they can offer for your particular circumstances.

TIP 7

Don’t feel pressured into signing up. This is your debt, not the company’s, so don’t feel obliged to sign up to a loan you cannot afford. Simply take their advice and shop around for the most suitable agreement. By being smart about your choices, and aware of the fraudulent activity that can occur you will be better equipped to obtain the required loan.