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When you have bad credit and are in need of money, the offers of personal loans will seem appealing, but it's dangerous to accept just any offer. Scam artists know that families in that situation will jump at almost any offer, and they rely on people who are desperate to get money.

Some businesses and individuals will attempt to get your personal and financial information in order to scam you out of money or properties. Here are a few tips to protect yourself from becoming a target. 

How to Spot a Loan Scammer?

The safest way to get a loan is through a reputable lender. If you do business online, try to deal with companies that have been in business for a while. If you are asked to pay by wire transfers, be cautious. Keep an eye out for loan companies that use high-pressure sales tactics or demand payment in a short time. Do business with people and companies you can verify.

Always be wary of the loan company you are dealing with. Loan scammers will trick you into sending money by making it seem as if you are paying a third party. The safest way to avoid being scammed is to be wary of deals that promise huge returns and guarantees.

What Does a Loan Scam Look Like?

Typically, shady lenders will offer loans with very generous terms compared to what you can get from legitimate lenders. You may also be asked to pay large fees to secure your loan, and these fees are never refunded even if your loan is declined.

The biggest issue with loan scams is that the scammer will usually access your bank account and take a loan out under your account number. The scammer will then use the money in your account to flee and leave you with the debt.

Red Flags You Might Be Getting Scammed

The loan scam will have you pay an upfront fee for a loan, but not give you the money you request. It's often an overseas company that doesn't have any connections to Australia.

A common scam is the payday loan scam, where a company promises to give you a loan for a few days, but the company will take your money and run away. The government warns people to be careful with these types of loans, which have high-interest rates. If a loan is too good to be true, it usually is.

If you receive a check in the mail, and the bank says it's too small to cash, it's probably fraudulent. The scammer already has your personal information, and they will take it to a store or casino and try to cash it. This scam has many variations.

What to Do If You Assume You Are Getting Scammed

The best way to combat this is to talk to someone you trust, such as a legal professional or friend. Talk to someone who will help you make the right decision. Do not risk losing money, as that could ruin your financial future.

Also, be wary of the situation you're in. If you know you will be getting a raise soon, or know you can get a loan from another source, you may not need a loan from these sources. The goal is to not fall for the scam and to make the best decision for your financial future.

Conclusion

Loan fraud happens to literally thousands of people every year. Use the tips above to avoid becoming a victim of loan fraud, and speak with a financial advisor about other ways to handle your situation. Before you sign any contracts or agree to give out your personal information, make sure you fully understand what you are getting into.

You can only rely on a trusted mortgage broker in Sydney for your home loans. At Wealthy You, we will connect you to more opportunities to finance your loan. Get in touch with us today to learn more.

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