Even though it has become quite common for people to order stuff or pay their bills online, you need to be really careful if you are considering applying for any of the online loans that are often advertised very aggressively. The reason for exercising extra caution is that typically, the sums of money are larger than an average pizza delivery or a credit card bill payment and the application process involves furnishing confidential and sensitive information that may be misused. It is important that you keep a sharp eye out for red flags that may indicate the need for special caution.
Major Risks of Borrowing Online
You need to know that many of the companies that promise really lucrative deals may actually be fraud. And will disappear after persuading you to part with application fees and loan processing fees without actually disbursing the loan. Some other lenders will give offers that include very high rates of interest and a number of fees under different names that ultimately translate to you paying a lot more than what a more reputable and transparent lender would have charged. When you deal with a bogus lender, not only do you lose money but also valuable time spent in applying and completing the formalities. Another significant risk of online loan applications is the risk of leakage or theft of confidential personal and financial information that may be used for identity theft causing you great damage and exposing you to litigation or worse.
Choosing the Right Lender
Most of the times, choosing a lender that is reputed and legitimate will ensure that you are not ripped off. However, it is always prudent that before signing on the dotted line, you should engage in thorough research. The best place is the internet because not only can you visit the website of the lender to find out more about them. And their applicable policies but also innumerable sites where you can read up on their level of service. Check the performance of the lender with the Better Business Bureau or the U.S. Consumer Financial Protection Bureau (CFPB) that specializes in monitoring complaints against companies operating in the financial sector.
It is always a good policy to seek referrals from people you personally know and can rely on like relatives, friends, and colleagues. It is quite likely that someone will be able to recommend a lender that he has been delighted with. Going by these references is a good way of minimizing your risk of getting a bad deal and ensuring that you don’t find yourself in a mess. It is a good policy to avoid an unsolicited email, phone messages or calls. Even if the offer is really lucrative since these are generally sent out by companies by the million. And you never can be quite sure with whom you are dealing. Many of these companies pretend that they are local but in reality, they could be parked in a remote country where US laws have no jurisdiction. It is always better to strike up a relationship with a company like liberty lending that is a familiar name that stands for dependability and customer-orientation.
Watching Out for Red Flags
While it can be difficult to spot a fraud lender if it is really determined to cover its tracks well. Normally most of the companies assume that potential customers are so attracted by the lucrative offers. That they will not pay attention to the negative signs. Some typical red flags:
Before, you make a commitment to take a loan, be sure that you are not being asked for any upfront fees on the pretext that an application fee is mandatory for the loan to be processed. Agreeing to pay an advance fee generally means that’s the last you’re going to see your money or the start of a series of such demands on some pretext or the other.
Another popular scam is to lure borrowers by saying that the loan approval is guaranteed. While it is true that the risk-taking tendencies differ from one company to another. No sensible lender will promise a loan without examining your credit history, sources of income, and collateral assets. If the offer is made, you can be sure that loan is designed to give them very high profits that can compensate for the losses they make on bad customers.
Fee payment by wire transfer:
Even if there is a genuine reason for paying upfront fees, never agree to transfer the funds by wire or through a service like Western Union because it is impossible to identify who has actually received the funds. Pay only by check or by credit card since a clear money trail can be established and typically only companies with clean records will be able to maintain banks or credit card merchant accounts.
Lack of professionalism:
Even the most reputed lenders may not be able to escape withering comments from their customers regarding service standards but you should be extremely wary if you find that your phone call is being ineptly or rudely handled or the literature and website are stuffed with spelling and grammatical mistakes. A website without adequate security features and certificates should immediately put you on your guard. If you think you are being railroaded into signing up for the loan, be sure to give the lender a miss. Be especially wary of companies that use words like ‘Federal’, ‘International’, ‘State’, ‘National’, etc. to impress customers or companies that mimic the names of reputed lenders to fool customers.
Apart from trying your best to avoid fraudulent lenders. You should also try and make sure that you are not being overcharged by any lender you are talking to. A good way of getting to know the ruling market rates is to use online services. That compare and contrast offers from multiple lenders so that you can spot the lenders you can focus on. Also, make sure that the lender is licensed to do business in your state. Limit sharing of confidential personal information online that can be potentially misused.