With the advancement in technology, borrowing money you need could happen in a matter of minutes.
Often an empty-handed not financially savvy person is ready to give his personal information to get approved for that long awaiting loan. And when a loan company asks to complete a credit application for a fee, a person still might not identify a scam.
Until it’s late…
Sound convincing, scammers promise you to get the best deal possible right away with no credit check. And when you are in a dire need of money, you don’t notice how fast you’re already on the hook.
To avoid scams, your first step is to learn whether a loan company you’re applying to is legitimate.
The catch here is to know how to check if a loan company is legitimate. All in all, knowing what to look for can save you a headache later. Even if that’ll require time, don’t skip that option.
How Do I Know if a Loan Company Is Legitimate?
In times whereas many short-term loan companies promise to get you back on your feet again, illegitimate ones use your difficult financial situation to their advantage.
According to the Federal Trade Commission, the sum of $1.9 billion is a total loss of fraudulent practices for consumers in 2019.
If you don’t want to be a part of that sad statistic, think on your feet.
The year 2020 is still here, yet, 3% of Americans who reported losing income had to borrow money using a payday loan, deposit advance, or pawnshop.
9 Things to Be Wary of When on the Lookout for Legitimate Loan Companies
There are several ways to check a loan company for legitimacy.
Legit loan companies are always on the tip of consumers’ tongue. For you, that means that once you say it out loud, at least one person will give you feedback.
No feedback? Well, no worries, Google will come to the rescue.
Okay, let’s go step by step and spot potential red flags you can’t miss out on when looking for legit loan companies.
Flag #1. Online Presence
Online presence is a must for any business these days.
For a legit loan company, a website is one of the most effective tools that can pull people in need through its doors.
Haven’t heard the name of the company before? Google it. No help from the search engine? Opt for special websites that help you find companies by showing their profiles, customers’ reviews, and the like. No results? You’d better pass the offer.
Found a website? Great. Now do the homework.
A company serious about its business can’t afford to have an unkept and cluttered website. Links, pictures, buttons, everything should work and be clickable. For extra impact, visit a blog page. It must be relevant and up to date. Pay attention to customers’ reviews or testimonials.
A company that offers a legit loan online is interested to place testimonials on the homepage.
Not in order? Or maybe not secure? The first red flag is on.
Flag #2. License Registration
A license is the other must for lenders in every state.
Research. A company that is not licensed in your state is more likely to be a scam. It matters nothing, even if the company is licensed in the other states.
Odds are, they might be using a business’s name to catch your attention and make money.
Don’t know where to find information about a loan lender?
Contact your state’s Department of Banking or Department of Financial Regulation. A reputable business will operate legally in your state.
Flag #3. No Physical Address
Do you know the location of a lending company?
A physical address is the other proof that a company that offers loans online is legit.
Find contact information. In addition, a contact form or a chat would be a great extra on the website.
Remember that a serious loan lender is interested in you. As a result, the company will provide all possible contact information to help you find it.
A P.O. box address is not enough for making business.
Flag #4. No Credit Checks or Payment History Needed
A lender who doesn’t perform credit checks is a red flag.
Story this, you have bad credit. You know that you’re an unwelcome guest in traditional banks. You’re risky.
The same story with online lenders. They know you’re risky, but before lending you money, they do a check.
So, to apply for legitimate online loans, consider the following. Legitimate lenders do check your financial history and credit to determine the level of risk for doing business with you.
Flag #5. You Are Guaranteed to Be Approved
There’re a lot of online lenders who work with bad credit borrowers, yet there are no legitimate lenders who promise guaranteed approval. Never.
Got time? Scroll carefully through the most popular lending companies and make sure you don’t find something like this ‘Everyone is approved’.
What they guarantee is that your application will be checked even with poor credit, but the result is unknown.
Flag #6. An Offer ‘Out of the Blue’
We all need money from time to time. But no reputable lender will reach you first to advertise its services.
Odds are, you’ve received emails from unknown individuals who shout out loud you’ve won a prize, got a tax return, or beneficiary. In exchange for information. That’s a scam.
The same here. Whether it’s in person, online, via telephone or mail, lenders who offer legitimate online loans will never contact you first.
Flag #7. Upfront Payment
When you’re empty-handed, it’s unnatural for you to pay extra to borrow money. Don’t you think the same?
Once you apply for a loan and there’s information about the upfront fee, close the tab.
From the other side, a lender may say you’ve been approved, then call or email and demand a fee for ‘insurance’, ‘processing’, or ‘paperwork’. It’s a clue to walk away.
Legitimate lenders disclose their fees clearly and prominently, sometimes even highlighting that it could cost you a buck.
For you, that means that you can get the money you need even with poor credit, but you’ll need to pay it often twice the sum.
Flag #8. No Clear Term and Conditions
When you change a job position, do you know how much would you get? Are you interested in your working conditions? Or you accept an offer rushing into anything? Chances are low.
So why would you accept a loan offer without having clear terms and conditions upfront your eyes?
A legitimate lender provides clear loan terms and payment requirements.
It makes it easier for you to calculate how much the loan will cost you at the end of the day. Things like the APR, the payback period, and the amount you can borrow should be clear.
Your offer lacks details? It’s time to go away.
Flag #9. You Don’t Feel Comfortable
Have found an ‘urgent offer’ with an immediate deadline? It’s a good sign it’s a scam.
Once you feel yourself under pressure, be sure you’re working with an illegitimate lender.
No reputable loan lender uses pressure to make you sign a loan agreement. No ‘money-back’ offers or ones that ‘expire tomorrow’ are a good sign.
Taking out a loan is a big decision. If you don’t feel comfortable, take a step back.
Sounds too good to be true? Probably it is.
How to Tell if a Loan Company is Legit?
When you’re on the lookout for an online loan, illegitimate lenders are hunting you.
The bad news is that scammers work hard to make you think they are legitimate. The good news? Your knowledge is your best defense.
Keep these red flags in mind and you can skip making your bad situation even worse. Stay savvy.