Online Loan Scams to Avoid

By Angela Monroe - March 13, 2020

It can be difficult to navigate the world of online loans as there are so many options out there. And unfortunately, scams do exist. If you’re looking for bad credit loans, you’ll want to be aware of these. Be able to take precautions to ensure you aren’t caught up in any online scams.

Scammers are becoming increasingly clever in the methods that they use. It can be really hard to identify a scam as they often take extreme measures. Like building websites that look almost identical to the company they are mimicking.

If you’re ever in doubt about whether something is an online loan scam, always ask for expert advice. It’s much better to be suspicious and be proved wrong. Than to simply go along with a request and find yourself taking advantage of.

Types of Online Scams

Some of the most common online scams include:

  • Pay Now Scams: You should not have to pay money upfront for a loan. Even if it’s said to be required to cover the transaction process (such as insurance or transfer fees).
    Often with pay now scams, you’ll be asked to make a small initial payment, which seems fairly insignificant. Always be cautious. You can often quickly check whether the company requesting the payment is valid by calling the contact number. If this is unavailable then you should be wary. You can also research the company online – you will often find other people who have experienced the same type of scam.
  • Loan modifiers: If you have recently bought a home or currently own one, you could be targeted by companies offering you a better deal or to ‘modify’ your mortgage. The offers that they make can seem really tempting. But always be cautious and don’t be afraid to ask questions and check their validity.
    If you’re unsure about the legitimacy of the offer, contact your loan provider directly. They’ll be well aware of the latest scams and can offer you helpful and impartial advice.

Ways to avoid online scams

  1. In Australia, you should ensure that any lender you consider a bad credit loan with is fully licensed. You can do this quickly and easily on the ASIC website.
  2. Be suspicious of websites. Even if appearances suggest that it is the company it says it is. Scammers can easily copy websites and create fake versions. So you should ensure it has a padlock symbol in the web address.
  3. Look at the email address of the sender who has sent the potential scam. If it’s a free service such as Hotmail or Gmail, you should be suspicious. An email about something as serious as a bad credit loan should be coming from a registered company.
  4. Question any company who requires you to pay upfront fees. Especially if they ask for money to be wire transferred or put directly into bank accounts. It’s not normal to have to pay upfront fees and you should always take your time. Ask for expert advice if you are unsure.
  5. Do not pay any company who put pressure on you or make you feel threatened in any way. This is not only unprofessional but almost certainly indicates that they are not a valid company and that they could be scammers purely interested in getting your money. People with bad credit loans are often targeted as they are sometimes vulnerable and keen to go for a better offer to save money – be cautious.
  6. Don’t click links in emails or online adverts. Often these links will simply divert you to fake websites, which are not monitored and could lead to you encountering an online scam. If you have a bad credit loan, only deal with your loan provider.
  7. Check phone numbers. You might be reassured by a number beginning with an Australian prefix but this could simply be an online scammer re-routing the number using sophisticated technology. If you’re unsure, ask for help and don’t pay any money before doing so.
  8. Listen to your gut. If something doesn’t seem quite right and you have even the slightest suspicion that it could be an online loan scam, seek help and expert advice. Even if it turns out to be wrong, being cautious will still be better than getting scammed and potentially finding yourself with more bad credit.

Too good to be true?

One of the key questions you should ask yourself when you are suspicious of an online scam is whether the offer is too good to be true. If the answer is yes then you should investigate it further and not pay any money until you have thoroughly verified it.

For people with bad credit, online scammers often offer no credit checks or guaranteed approval – this can be really appealing if you are struggling to get a loan but it’s simply not real and you’ll want to avoid it at all costs.

Many of the online scams put pressure on people by telling them that the offer is going to end soon and they need to act now. Be cautious of these tactics – a reputable loan provider should never put pressure on you to act before you are ready to.

Unfortunately, it can be difficult to avoid online scams entirely. Yet being vigilant and remaining cautious is the best approach – always ask for expert help and advice to keep yourself and your money as safe as possible.

Angela Monroe
Angela Monroe is the Community Manager at The Positive Group, specialising in giving people the information that they need when they need it, and putting you on the path to a fair financial future. She has 8 years of experience in helping Australians find the right finance solutions, and regularly contributes articles to empower Australians with the knowledge they need to become financially healthy.

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