Technology has made life easy and exciting. You can successfully transact online, pay bills, or apply for a loan irrespective of time and where you are. In fact, a money lender opens on Sunday in my area. Isn’t that beneficial? Gone are the days when you will be required to queue in the banks for long hours to apply for a loan. Technology has revolutionized money lending. Even though traditional approaches are still used, banks are now doing all it takes to match what competitors are doing, and this is beneficial to customers. Besides, the loan application is paperless.
You don’t have to carry a volume of documents to try to convince lenders that trustworthy. Competition in this industry has streamlined the loan application process. In this digital era, borrowers want customized services, and this is a demanding business as you have to meet in order to cope with competition. The question is, how safe is borrowing money online?
The Risk of Borrowing Online
While technological advancements have improved the financial system in general, it has also made it easy for people to be scammed. You may be a technology pro, yet when the chances are high that when making an online loan application you are giving sensitive information to the individuals, you do not know, and perhaps you are talking of a huge loan. While there are so many licensed money Lender online, not all are safe from borrowing money online. Some unscrupulous lenders may take advantage of your innocence to make fortunes.
The safest way of applying for an online loan is to deal with only a reputable lender and to pay attention to the red flags. Online borrowing has two main risks. First, you are risking losing your hard-earned money. Scammers often establish shops and ask for charges before approving your application. You end up not getting what you wanted. Secondly, you are likely to pay too much. While your application may be successful, you may still have to spend too much in terms of charges and interest if you are dealing with a bad lender. Good lenders should approve your application for s similar loan for less.
There is yet another problem you are likely to experience; identity theft. This is a scam that happens when you unknowingly provide your sensitive personal information to identity thieves. You may also give your information to genuine people, but their websites fail to protect you. While they may not collect your personal details with the intention of conning you, the information may get into the hands of scammers, and that is risky. The information often contained in an application form often include your address, your social security number, and date of birth. This information can be used to access your account or for any other unethical financial purpose.
Is it not a loss when you spend your time trying to argue and proving yourself worthy of a loan before a bogus lender? Imagine how bad it can feel knowing you have been spending too much time in applications and follow-ups, yet it was not worth it from the beginning? You can avoid all these if you pay attention to everything you are doing right from the start. It may be challenging to identify a scammer. Even so, you can easily identify legit lenders. So then, what can you do?
What to Do
There are several things you can do to protect yourself from scammers. As we mentioned in the preceding section, you need to be careful right from the beginning. The following are some of the things you can do to avoid being prey to scammers.
Select the Right Lender
You can protect yourself from various problems you transact with a genuine and reputable lender. The best way to get a reliable lender is to look for information and reviews, both positive and negative. Also, you should keep in mind that not every piece of information you come across on the internet is correct. There are odds on reading positive reviews from the workers of a con artist. It will be safe to apply for a loan from a lender you have learnt about from trustworthy sources. Before sending an application, look for information about the complaints made against the lender.
Again, do not stop at information from trustworthy sources. Discuss with friends and family members about where they personally borrowed and the kind of experience they had. Besides, financial influencers can also give information about legit lenders. If you have better sources, you will be more confident about everything. Unreliable sources are characterized by the following:
- Unsolicited calls, more so from blocked contact, are often used to scam people.
- Emails from unknown sources.
- Unprofessional sales
Pay Attention to the Red Flags
You can identify a scammer if you are careful because they often offer themselves away. Carefully consider how a lender behaves before giving your personal information, or any money. If you note either of the following red flags, look for a different lender.
- Upfront fees. Legitimate lenders do not fake upfront charges. Thieves often use the advance fee scam, trying to convince people that they need to pay some fee for the loan to be processed. It is only in large loans, such as mortgages that legit lenders ask for a processing fee.
- Guaranteed approval. Do you know anyone who is actually in business to lose rather than to profit? Genuine lenders cannot guarantee that a loan will be given to you. Your application has to be reviewed carefully, paying attention to critical factors such as your credit history, and debt-to-income ratio among others
- Request for finances through wire or western union. You are applying for a loan because you need money. Why should you send money again? While some loan demands some fees, they are paid via checks or credit cards.
Avoid Dangerous Loans
Some loans are risky irrespective of where you borrow from. Avoid expensive loans that can worsen your financial status in the end. Importantly, do not deal with unlicensed lenders and pay attention to illegal practices, such as charging interest rates beyond the acceptable limits.
Borrow only the amount you need and capable of paying back and that will be a safe borrowing. The fact that you qualify for a larger loan should not tempt you to take it. It is always a temptation to borrow the maximum you are eligible for.
Borrowing money online is not safe. You are likely to lose your money or identity if you are not careful. You must ensure that you are dealing with legit lenders always. In this blog, we have discussed the risks of borrowing online and how you can avoid being scammed. But how can you identify a legal lender? That will be the topic in our next discussion.