Loan fraud

How to avoid loan fraud

If you are suffering financial difficulty, did you know you make an easy target for loan fraudsters?

These 'companies' offer tempting long-term repayment options, and a promise to ease your financial woes. But in return, you have to pay a hefty sum upfront - and the loan never appears in your bank account.

Unfortunately, these bogus loan firms are on the rise. Here we explain what to look out for to prevent falling victim to loan fraud.

What to watch out for

These companies will approach you asking if you're in need of spare cash. They prey on people in financial difficulty, and may also place ads on the internet or in newspapers and magazines in search of potential victims.

Whatever you do, don't hand over your bank details without feeling entirely confident you've made a sound decision.

If you contact them, you'll be told getting a loan is no problem. But there's a catch - you must pay the fee upfront for the loan, before it can be arranged. Unsuspecting wannabe borrowers have been known to shell out thousands of pounds for these 'loans', according to the Citizens Advice Bureau, only to fund the money never materialises.

Alternatively, they may ask you to pay the first instalment over the phone, and ask for your bank details.

The fake loan provider then disappears with your details and cash, leaving hard-up borrowers even deeper in debt.

So be wary if you're approached by a company that seems to fit this mould. There's usually a catch if you're offered easy cash, after all. If a deal looks too good to be true, it probably is.

Check the credentials

If you are considering taking a loan with any company, check to see if it has a registered address and do your research before signing up. Call the telephone number, and check for the company's online presence and any borrower reviews of their service. If there isn't an address and domestic phone number, your suspicions should be raised.

You can find a loan from a trusted personal loan lender on sites such as MoneySupermarket. If a company cold calls you, be wary. When going through financial difficulties you are vulnerable, but it'll pay to keep your wits about you. You shouldn't feel pressured to take on a loan with any lender. So if you feel the company is bullying you into taking a loan with them, look elsewhere.

Whatever you do, don't hand over your bank details without feeling entirely confident you've made a sound decision.

Moneysupermarket is a credit broker – this means we’ll show you products offered by lenders. We never take a fee from customers for this broking service. Instead we are usually paid a fee by the lenders – though the size of that payment doesn’t affect how we show products to customers.

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