Introduction to How to Avail Online Loans
Coronavirus has led to drastic unemployment and the rise of loan scams globally. However, the UK is facing £130 billion every due to loan scams.
Some of the prominent ones include the advance fee, phishing, universal credit loan, clone firms, and home buying.
These scams don’t necessarily target a specific population and those seeking loans for students UK, or other options.
Moreover, getting stuck with these types of scams can increase the magnitude of the financial crisis, especially for the recently unemployed.
Furthermore, according to a Guardian article, student loan debt in 2017 was £100 billion. The debt has substantially increased for all types of loans over the past few years.
The Most Common UK Borrowing Rackets
● Advance Fee Fraud
Some scammers provide attractive interest rates to lenders in exchange for an advance fee. They claim that the fee would get utilized for application processing. Moreover, they ask for the fee upfront.
Any legitimate UK lending firm or individual never follows the advance fee fraud practice. Instead, they provide the option of adding the fee to the loan amount or making a separate post-approval and disbursement.
The advance fee fraud practitioners contact potential futuristic victims through email, SMS, or a phone call. They disappear as soon as they receive the advance fee from the person.
● Phishing
Scams that require a person to provide personal information through email have a global term known as phishing.
On the other hand, a similar practice done through text is commonly referred to as smishing.
The attacker would try to gain information like income, bank details, security questions, etc. Moreover, such scammers can even use the same information to disburse new loans in different accounts or impersonate a person. Both practices fall under the identity theft category.
● Universal Credit Loans
A universal credit provides add-on benefits besides financial assistance. Therefore, it allows borrowers to avail of money more quickly.
The scammer uses this opportunity to target people in financial debt. They offer government grants and financial loans so that people share their personal information.
The scammers even hack claimant information to send unavoidable loan offers. The fraudsters divert the borrowers to an online website that requires filling up a form. After that, they use the information to claim the benefits for themselves.
● Clone Firms
A clone firm is a type of corporate identity theft. Scammers impersonate as a legitimate company representative or speaking on behalf of a recognized organization.
After that, the loan fraudsters try to obtain personal information about the interested money borrower.
The perpetrators use the information to solicit upfront fees or commit fraud. The usual method of these clone firm scams is through email, text messages, or letters.
● Homebuying
Finding the right lender, agency, company, bank, or organization becomes crucial when you seek financial assistance for buying a home.
Scammers try to attack new or unaware homebuyers by asking them to deposit the initial amount in an unreliable account.
Homebuyers can become targets of this scam even with legitimate email communication. At times, hackers use email interception to provide deposit information to the buyer. The latter unknowingly deposits the amount into the account and becomes a scam victim.
Solutions to Avoid Becoming a Victim
Homebuyers can avoid becoming victims of an attack. It is possible by contacting the lender about a last-minute email, new deposit account message, or asking for details on encrypted communication.
Furthermore, the victims of these scams have a low chance of receiving their money back. However, the facility of reaching out to FCA and Action Fraud remains available via phone or website. However, the ongoing backlog of such frauds wouldn’t provide any hope.
Borrowers should know that besides these five most common loan scams in the UK, there are others. These include car title, cash advance, overdraft protection, pawnshop, and private student loan scams, among many others.
Fortunately, there are a few practices that can help to avoid such scams, even in the long run.
These include checking for FCA verification, determining the legitimacy of contact information, verifying marketing professionalism, and reading reviews.
Businesses also face credit repair and ghost investment scams, besides the advance fee loan fraud.
Further visit: What is Shared loaning? 4 Essential Facts
However, organizations can avoid credit repair scams by opting for a legitimate company that doesn’t promise overnight score improvement.
Similarly, a company can avoid a ghost investment scam by conducting business finance and leasing through a reputable organization. The latter should provide different types of monthly payment options.
Other measures include using padlock websites, download apps from trusted sources, choosing alternative income options, and using secondary factors of authentication.
People opting for one-click loans or any other form of borrowings should stay alert of new scams and cyber threats.
Besides this, before proceeding with any loan offered through email, SMS, or phone call to check for a few factors.
These include verifying the sender’s email, common language errors, and call the organization after verifying the contact details on the search engine. Also, ask about the offer sent to you.
In case the lender, financial institution, bank, or company would resend an email or SMS so that their loan borrower can make a distinction.
Besides this, a borrower can submit a canceled cheque at a bank or financial institution for auto repayments and fees. It can help to avoid loan scams.