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How to identify and evade personal loan con-jobs?

Personal loans can be of great help during times of financial emergencies such as moving to a new home, car repairs, home renovation or repairs, wedding, holiday, or purchase of a gift for a friend/loved one. It can particularly be god-sent during a medical crisis.

It is however vital to note that there are numerous fraudsters and con-artists who cheat naive borrowers on a daily basis. They also sell the personal data of borrowers whilst posing as lenders of personal loans. It is therefore advisable for borrowers to avail the services of a trustworthy matching service that has its operations across the US. The matching service providers help borrowers in avoiding fraudsters by connecting the borrowers with reputed financial lenders.

There are several signs that borrowers can look out for to identify scammers and avoid personal loan frauds. Some of these indicators are mentioned below.


  • Unlicensed financial lenders: The law requires all financial lenders to be registered. Also, the Federal Trade Commission (FTC) has mandated all brokers and financial providers to be authorized to run their operations in a state. Borrowers can visit the website of the lender to verify the states in which it is permitted to operate. You may also get such information from the banking regulator, the FTC website, or the office of the state attorney general. This can help avoid dishonest lenders and scammers.
  • No-credit-required financial lenders: Lenders check the credit of borrowers to check their creditworthiness and determine their tendency to repay and prevent default. A credit check also helps lenders verify the personal details provided by the borrower as well as determine the rate of interest. It is therefore vital for borrowers to be careful of lenders who guarantee approval of loans without any credit checks. Genuine personal loan lenders do not offer that kind of guarantee.
  • Personal details: There are many websites that offer promise of short-term personal loans, but in fact are middlemen who harvest the personal data of applicants and sell them to third parties. Only a direct financial lender lends the loans. Borrowers can verify whether the provider is a direct lender or not before filling the application form. Also, it is better to be wary if excessive personal details such as credit card details, bank accounts, and social security number, etc. are asked to be filled in addition to normal details like date of birth, employment, name, and phone number. This can help borrowers avoid personal loan scams.
  • Advance charges: Prepayment of charges before getting a loan is illegal as per Federal Law. Hence, avoid financial lenders who ask for a payment, collateral, or a prepaid debit card before processing the loan, as they are usually scammers.
  • Financial lenders without any office: The lack of a physical office address is a sure-shot indicator of a fraudster. Find the physical address of the lender from the website and then call directory assistance to verify whether or not the address is genuine or fake. Also avoid financial lenders with unsecure (Non-“https” websites).