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Everything in our life is dependent on the Financial status. Now even in India, consumer’s status is verified through their CIBIL scores. And from March 2020, with people losing their jobs and big and small businesses being affected all the same, everyone is facing the “Pandemic Financial Crisis”.

Millions of Salaried individuals have lost their jobs and with EMI’s and ongoing loans, there was no respite even for the promised three months restitute, offered by the government. Thus, the number of searches on the internet for Personal Loans, Less Interest, Easy Loan, Loan agency, Flexi Loan and the likes.

With the same rise, the number of Fraud Financial Service Providers trying to make money from the desperate customers, making false promises of low interest, easy payment methods, floating EMI’s, Salaried Personal Loan etc. Now, as everything is online, such circumstances have also given rise to online frauds through emails, bank accounts, online banking and even phone numbers. Yes, technology is good, but these smart Techies are people with a very sharp and smart mind.

Now we need to be more careful and be able to recognise such false institutions for more safe loans options.

So here are the tips to know whether your Concerned Lender is a fraud.

1. Is this a Clone Company?

To recognise a Clone/Fake company, we need to make sure that they have a verified and registered Physical address. Also make sure to visit their website and look for the padlock or website starting with https: tor secure website.  We can also check the list on the RBI or SEBI website.

Also, an established Financial Company would not make any cold calls or send text messages nor contact you through emails, promising the Best Loan.

2. Recognise Unregistered Financial Institution.

In layman’s language, an unregistered Finance Company is the lone which we normally call Loan Sharks, who lend the money with little or no documents. 

In such cases, we have to be more alert about the type of Finance Company we are doing business with.

There are two types of Registered Finance Company.

a. The Co-operative Societies – They serve the interest of borrowers. These companies are under Multi State Cooperative Societies Bill.

b.  Non-Banking Finance Companies (NBFC Company) – These companies are registered and verified by Reserve Bank of India under Companies Act, 2013. There are two types of NBFC Companies.

  • The companies which deal with both, advancing the loan as well as accepting the deposits
  • The companies which only give advance or loan to the borrowers.

3. No Affordability Statement or Payment History

On a more personal front, we can recognise the Loan Frauds when they do not show any concern in checking our Income flow, whether we will be able to repay the loan. Nor are they interested in our payment history.

This is a cause of concern especially for salaried people looking for Personal Loan. A genuine lender would not promise or guarantee a loan unless they check our financial background and payment history to make sure that we would be able to pay the EMI’s and are not the defaulters.

4. Pressure to part with confidential information and Sign the Loan Documents

Reliable lenders like ICICI Bank, HDFC bank or any other private or government bank, would give you time to think about all the possibilities and also give you the comparative rates. They would also wait for you to submit the required confidential documents like your pan card, Aadhaar card, address proof, financial account statement. Whereas, a fake lender would pressurize you to part with all the above-mentioned information at the earliest.

5. The Processing Fees involved for Loan applications

 A genuine Financial Company will always be transparent in disclosing the processing fees involved, which may vary according to the Lender financing your Loan. 

A Fraud lender will not be very clear about the fees for processing the loan and such Fraudsters would also ask for the upfront payment of fees in cash.  They do not give the borrowers enough time or space to think or make comparative study. But pressurising them by giving a deadline to make up their mind faking it as a “Limited Period Offer”.

6.Are there any Hidden Fees?

A reliable loan agency would be transparent in its dealing and would disclose every minute details like the processing fees, prepayment penalty, lock period and different terms of services.

 With the onset of Software companies, digitisation, online services, yes, we are a growing India, but we also need to acknowledge that the corruption and fraudulent people are also very intelligent and tech savvy. And so, we must be more careful and aware of the things going around us and not fall for Fake Loan Money lenders in our desperation, lest we lose the little we have saved.