How to Identify & Avoid Personal Loan Scams

People from all walks of life sometimes require financial assistance in some circumstances. You might need capital to fund a start-up business idea or to pay for or furnish your first flat. Whatever the reason, we know your need is valid. Several financial institutions, including Dialdirect loans, offer personal loans to meet this ever-present demand. Unfortunately, cybercriminals are taking full advantage of people’s financial needs. Discover how you can avoid personal loan scams with these tips from Dialdirect. 

What is a personal loan scam?

A personal loan scam is a fraudulent act involving criminals tricking people into paying for a loan that does not exist or will never be approved. Scammers will target people who need financial assistance or those with a poor credit scores. Some common tactics scammers use include some of the following:

• Phishing emails. A scammer may send an email posing as a legitimate lender or financial institution. Many of these emails are linked to fake websites that are designed to steal sensitive personal information, so be careful what you click on. 

• False promises. Scammers make inaccurate claims, like offering loans with very low-interest rates or instant approval, all of which seem too good to be true.

• Impersonating government agencies. A scammer may impersonate a government agency or officer, like SARS, to trick people into thinking the loan is legitimate. 

• Claiming pre-approval. Scammers will often promise guaranteed approval of a loan, regardless of the borrower's credit history or financial status. 

• Fees to secure the loan. A scammer will almost always request an upfront payment fee to “process the loan.” They will claim that the funds will be deposited straight into the borrower’s account once this payment has been made. Don’t fall for this trick. 

7 Ways to spot personal loan scams

Be vigilant. Scammers use sophisticated online technology to trick you and look legitimate. However, these are the red flags to look out for when you’re trying to avoid personal loan scams[1]:

1. Upfront fees. No financial institution or insurer will ever ask you for money to secure your personal loan.

2. Poorly designed website or emails. Scammers will often use copy with typos or poor grammar. The website might be badly designed. 

3. Guaranteed approval. No lender can ever guarantee your approval for a loan, so be wary of anyone who says that you’re automatically approved.

4. Requests personal information. While a legitimate lender will ask for information like your ID number, for instance, a lender would never request sensitive or private bank account information.

5. Pressure to act quickly. This is a common tactic. A scammer will imply that this loan is for a limited time only. If you fall for this, you’re likely to make a rash decision without thinking about it properly or analysing all the discrepancies.

6. Strange payment methods. Avoid lenders who want to make payments via wire transfers or other unusual payment methods. 

7. No physical address. A legitimate business will always have a physical address you can verify. 

How to get a personal loan with Dialdirect? 

You can apply for Dialdirect loans of R1 000 to R250 000, depending on how much you earn. The process is easy, and you can apply online. The only criteria you will need to meet are as follows:

• Be 18 years or older.

• Have a valid SA ID or driver’s licence.

• Have a bank account.

• Be employed and earn R2 000 or more per month.

• Provide proof of income.

Now that you know what we require, please note the following to differentiate between the scammers who might be trying to rip you off and us:

What Dialdirect does not do:

• We do not ask for loan or policy admin fees up-front.

• We do not use generic email addresses like Gmail, Yahoo or Hotmail.

• We do not offer loans exceeding R250 000.

• We are only contactable on this number for loans - 0861 877 772.

• Our communication has clear and high-resolution logos (like those on our website).

• We do not conduct face-to-face interviews.

• We do not use bank accounts in any person’s name.

• We do not communicate with incorrect spelling and/or grammar. All our communication is quality controlled.

If you receive any communication in our name with any of the above warning signs, please contact us immediately at 0861 877 772 to report the incident. We will then take the necessary action to bring the perpetrators to justice.

Personal loan insurance cover

This is a type of optional insurance when you take out a personal loan. It covers repayments on a personal loan in the event of the borrower’s death, disability or retrenchment. The purpose of personal loan insurance cover is to provide financial protection to the borrower in the event of an unexpected life event. So, if the borrower became disabled, for instance, and cannot generate an income to repay the loan, the insurance policy will make the loan repayments on their behalf until the end of the policy. This way, the borrower won’t fall into debt or damage their credit score. 

Get a personal loan from Dialdirect

We provide a wide range of top-quality insurance policies for vehicles, businesses and homes, not to mention all the value-add insurance policies. We also offer personal loans. If you’re looking for a reputable institution to help you out, trust Dialdirect. Apply for a personal loan today. 

Sources:

[1] The Sowetan: Loan scams will land you in deeper debt 

Disclaimer: The information in this article is provided for informational purposes only and should not be construed as financial, legal, or medical advice.