Applying for a Personal Loan Application? Beware of the Loan Scans

Personal loans are a practical way to get financial assistance in the event of an emergency or unforeseen circumstances. However, personal loan scams have become more frequent in recent years, with scammers and imposters preying on vulnerable customers. Identity theft and fraudulent loan applications can have serious implications, such as poor Equifax credit score, financial loss, and legal complications.

Let’s have a look at some warning signs of a fake personal loan and how to avoid them.

What are the warning signs that indicate personal loan fraud?

Promises of assured acceptance: As a borrower, your main concern when applying for a personal loan is the application process and it is this process that these scammers exploit. Personal loan scammers guarantee you a loan without requiring you to provide proof of income, credit history, or any other vital documentation. Whereas a credible lender will look at various aspects such as Equifax credit score before processing your application.

Lack of transparency: A legitimate lender would always provide thorough information about all aspects of the loan, such as repayment schedule, processing fee, interest rate, required CIBIL score or Equifax credit score, foreclosure charges, and so on. Consider it a warning of potential personal loan fraud if your lender does not supply you with this information, skips out on important data, or avoids answering questions.

A high processing charge or interest rate: A recent pattern in personal loan fraud in India has been that they issue loans at a fee and interest rate that is higher than the usual industry rate. It is seen that usually, those without an Equifax credit score fall prey to such scams.

High-pressure sales tactics: Personal loan scams are sometimes accompanied by a sales team capable of convincing you that this is your best deal. They will call you on a regular basis, attempting to persuade you to apply for a personal loan that they are offering. They may also make you unreasonable offers without looking at your Equifax credit score in order to convince you to agree. 

Understand the type of loan Fraud:

There are a number of fraudulent loans that happen in India. However, some of the most common are as follows:

Identity Theft: In such cases, one individual applies for loans in the victim’s name using the victim’s name, address, Aadhar card number, and date of birth.

False Documentation: This occurs when borrowers apply for loans using fake bank statements and income tax returns.

Ponzi Schemes: In a Ponzi scheme, lenders offer high returns on investments, but instead of using the funds to run a legitimate business, they pay off prior investors with money from new investors.

Loan Flipping Methodology: Lenders sometimes attract potential customers to refinance or take out new loans in order to collect extra fees and commissions, sometimes at exorbitant interest rates.

Advance Payment Fraud: This occurs when con artists demand an upfront payment or fee from a borrower in exchange for a loan that they do not intend to supply.

Forgery Fraudsters: Those who indulge in forgery create loan documents from scratch or falsify signatures on loan documents such as promissory notes and loan agreements.

Loan Scams: Fraudsters create phoney loan accounts in the names of non-existent borrowers in order to obtain loans from banks and other financial institutions.

Lenders and Borrowers Working Together: This occurs when lenders and borrowers collaborate to defraud banks either using check free credit score or other financial institutions by submitting counterfeit documentation or providing incorrect information.

What measures to take to prevent you from falling for personal loan scams?

It is important that you find out if anybody is misusing your KYC in order to protect yourself against identity theft and financial crime. If you believe that your KYC documents or check free credit score for that matter have been misused, you must act quickly to verify and safeguard your identity. Here are some measures to take:

Conduct market research: Before accepting any personal loan, conduct market research apart from check free credit score. Please research the lender and confirm its legitimacy. Check with the Reserve Bank of India or other financial authorities to see if the lender is registered. 

Protect your personal information: Never give out your personal information over the phone or over email to anyone offering you a personal loan. A legitimate lender always follows a specified protocol and will never ask for your bank account information or password. And, do check free credit score from time to time. Even if one is cautious, one can fall victim to personal loan fraud in India.

Credit reports should be checked on a regular basis: Each bureau is required to provide you with one free credit report per year. You should get one and examine the report carefully for any unusual loan accounts, inquiries, or credit applications that you did not authorize.

Examine loan-related communication on your Email and phone: Take note of any loan-related communication, such as emails, letters, or SMS alerts. Be wary of unexpected loan acceptance or rejection notifications. If you get any sort of communication involving loans that you did not apply for, contact the given lender to inquire further.

Contact your lenders directly for more information: Contact the lenders directly if you suspect fraudulent loan applications. Explain your worries and ask for information on any loans taken in your name. Provide any pertinent information or documentation you may have, such as the loan application’s date, time, and place.

Increase your security from time to time: Take precautions to protect your personal information. Change passwords on a regular basis, use strong and unique passwords, activate two-factor authentication when applicable, and avoid revealing critical information unnecessarily.

Reporting: Consider filing a police report if you have specific evidence or strong suspicions of identity theft or fraud. Give them all of the pertinent information and proof you’ve obtained. They can launch an investigation and advise you on the next steps.


If you are unsure about the best course of action, consult with a lawyer who specializes in identity theft or consumer protection. They can give you personalized advise based on your situation and guide you through the procedure. With the help of the aforementioned factors, you will be able to protect your financial well-being and minimize the damage caused by fraudulent loan applications.

Freya Parker

I am a seasoned SEO and link-building specialist with a dedicated team of experts poised to deliver exceptional results for you. Our comprehensive range of services includes top-tier link building, impactful guest posting, and premium content creation. Furthermore, we excel in optimizing your current link profile, augmenting it with high-quality backlinks to elevate your website's performance to the fullest. Digital Marketing Services United Insta

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