How to avoid loan scams  

As more and more people are signing up for short term or payday loans, with a study published in 2014 showing that 86% of South Africans had borrowed in the previous year, it’s also clear to see how easily some people can fall prey to loan sharks or be caught up in fake scams, especially with the advancement of social media making it almost effortless for such scam artists to contact you or promote their schemes.

There are many different types of scams, with some of the most popular involving texts or emails from supposedly reputable loan providers which can seem like the perfect lifeline when bills have just come out and the next payday is still weeks away.

The best way of course to take out a loan is through a professional lending service that is registered with the National Credit Regulator such as Wonga, but unfortunately no company is immune to scammers who are entirely unaffiliated with them pretending to represent the brand via phony websites and emails. While data held by Wonga would never be shared, and has never been breached, scammers can gather your data through other means such as the SSA security breach in  2017.

So how do you check what is too good to be true? Here are six handy tips to keep you safe from scammers.

  • Read the small print

One way that scammers can trick you into handing over large amounts of money or charging excessive interest is through hiding it in complicated jargon. Don’t sign anything unless you know absolutely what it entails. Ask questions until you are clear and if a company tries to brush you off or refuses to answer these it’s a sign something is wrong.

  • Look a gift horse in the mouth

It’s a very common scam to get a text along the lines of ‘Congratulations! You are eligible for a pre-approved loan.’ If you see one of these, you should ignore it immediately. Reputable lenders will never approve anyone without a background check on their credit history.

  • Paying up front

No legitimate lender would ask for any money up front to secure a loan either. These scams will usually try to sell this to you as being costs for ‘administration’ or ‘processing fees’ but they are the easiest way of getting your money quickly so they can take it and disappear.

  • Gone without a trace

When you see an offer from a company offering a loan look them up online. If they have no online presence or no contact details they are a guaranteed fake. Genuine companies will be happy to provide you with an email address and a telephone number to contact customer support. Even if they offer these to you do your research, look for reviews, or any mention of them on social media to back their credibility.

  • Handing over your details

Never give out your personal details, this is extremely important. If someone representing the company asks for something like a credit card details or your PIN, they are only in it to drain your bank account or steal your identity.

  • Check the spelling

This is quite an easy way to check if a loan offer is a scam. Many scams often contain more grammar or spelling and can even misspell the name of the company they are supposed to be representing, especially if this is supposedly from a genuine well known organisation. If they provide you with an email or a website, look for small changes in the spelling of the company name which would otherwise go unnoticed and means you are being linked to a fake website.

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