An upfront fee: When you apply for a loan, you are the one in need of money. Only a fraudulent lender will ask you to pay a fee before approving your loan and transferring funds. Don’t ever forget that you’re the one asking for a loan. An application fee, a credit check fee, etc. can be an indication of a scam. Always do your homework about which lender requires you to pay before funding you and which doesn’t in order to avoid the slightest possibility of you being tricked.
- Credit check fee: Note that most online lenders do not conduct credit checks, which is why a credit check fee is definitely an unnecessary requirement. Online lenders offer loans even to those with poor credit scores which is why they do not go ahead with a credit check. If one does ask you for a credit check fee, it is most likely fraudulent in nature.
Collateral requirement: In most cases, online lenders do not ask for collaterals. That is one major reason why many business owners prefer opting for an online loan over a traditional one despite the higher rates of interest. Along with keeping this in mind, it is anyway a better idea to avoid providing collateral when you have the chance to. However, if you do choose a lender who asks for security, do not give any confidential information before getting to know more about the company.
Safety and Security Regulations: Always ask your lender about their safety regulations. Ask them about the encryption that they use and make sure that you go ahead only when you’re a 100% sure about your information remaining confidential with your lender.
Have a look at the website: A legitimate lender will take out the time to make a proper website, unlike a fraudulent one who may make do with just a couple of pages. A good website may be an indication of it belonging to someone trustworthy. The language of the website may also play an important role in determining whether or not it is a genuine one.
While taking the above mentioned points into consideration, it is important that you do a thorough background research on your lender before applying for a loan. Always know that you have options and don’t have to rely on one specific lender in order to provide you with a loan.