Fake Loans: Helpful Tips to Safeguard Your Money Against Personal Loan Scams

With personal loans becoming increasingly accessible through digital lending platforms, instances of fake loans or personal loan scams are also on the rise. Fraudsters often exploit individuals in urgent need of funds by using phishing calls, deceptive SMS messages, fake loan websites, and fraudulent mobile apps. Falling prey to these scams can lead to significant financial losses and even identity theft.

So how can you protect yourself? This guide will help you identify common personal loan scams in India and detect the signs of fake loan websites and apps to protect your hard-earned money.

What Are Fake Loan Scams?

Fake loan scams are fraudulent schemes where scammers pose as legitimate lenders to deceive unsuspecting borrowers. These fraudsters often create convincing fake loan websites and mobile apps, send professional-looking emails, and use other tactics to appear credible. Their objectives typically include:

• Tricking individuals into paying upfront fees under the pretext of loan processing or approval.
• Collecting sensitive personal and financial information that can be misused for identity theft.
• Taking out loans in your name without your knowledge or consent.

How to Identify Loan Frauds in India

Here are some common signs of fake loan calls and phishing scams:

1. Unverified or Suspicious Lenders

Beware of lenders or NBFCs who are not registered with the Reserve Bank of India (RBI), have no physical office address, provide vague contact information, or operate through poorly designed websites filled with considerable grammatical errors. Be especially cautious of lenders who communicate exclusively via WhatsApp, Telegram, or SMS. To check if a lender is RBI-registered, visit the official RBI website.

2. Fake Loan Websites and Apps

Look for “HTTPS” in the website URL to determine whether it is safe. Additionally, verify the authenticity of loan apps by downloading only from trusted platforms like the Google Play Store or Apple App Store. Avoid third-party APKs or links shared over messaging apps or emails.

3. Requests for Upfront Fees

Genuine lenders will never demand advance payments. If you’re asked for any application or processing charge to be paid upfront, it can be a red flag.

5. No Credit Check Required

Reputable lenders assess your credit score, verify documents, and evaluate your repayment ability before approving a loan. If a lender guarantees instant approval without any credit checks or paperwork, it should raise concerns.

6. High-Pressure Sales Tactics

In order to generate a sense of urgency, scammers often use phrases like "Offer valid for 24 hours only." Reputed lenders will give you adequate time to review the terms and make an informed decision.

How to Check If There’s a Fake Loan in Your Name

Even though you have not applied for any loan yourself, a scammer may have taken one out using your identity. Here's how to verify this:

1. Review your credit report regularly. Accessible via credit bureaus like CIBIL, Experian, CRIF High Mark, or Equifax, these reports list all loans and credit accounts under your name. Look for any unfamiliar entries.
2. Review any communication from lenders or banks – such as loan account statements or transaction alerts – for suspicious loan-related activity.
3. If you find a loan that is unfamiliar, contact the lender immediately. Also, report the fraud to the credit bureau and relevant authorities.

Final Words

Falling prey to personal loan scams can have serious financial consequences, but staying vigilant and following basic security practices can help protect you. As a precaution, it’s essential to stay informed about consumer rights against loan fraud in India and understand the legal steps to recover money lost in loan scams.

If you're looking for a trustworthy personal loan provider, SMFG India Credit is here to help. We prioritise transparent loan processing without any hidden fees and charges. Our dedicated support team can be reached via phone, chat, or email. You can also visit your nearest SMFG India Credit branch. Check your eligibility and apply online today for personal loans of up to INR 30 lakhs*!