Tips to Avoid Personal Loan Scams in Nigeria
Recently, getting a personal loan has become very easy.
However, this convenience also brings a risk to the loan takers.
Many Nigerians, without knowing, are tricked by dishonest groups.
These loan scams are very common.
In this article, we will talk about the different kinds of loan scams and how to spot and avoid them.
The Various Kinds of Loan Scams
Here are the 7 types of loan scams you need to be careful of:
- Online lending scams.
- Phishing scams.
- Debt relief scams.
- First contact scams.
- Impersonator scams.
- Full-guarantee scams.
- Upfront fee scams.
Online Lending Scams
There are some harmful online sites that pretend to give loans but in reality, are looking to collect the personal data of people who apply. The stolen information is then sold to a third party or used to get into the victims’ bank accounts.
Debt Relief Scams
Some tricksters say they will help businesses and individuals pay off big debts to give them more time to pay. They offer this service at a cost which must be paid upfront. However, once the fee is paid, the scammers disappear.
Upfront Fee Scams
It’s normal for lenders to ask for insurance, origination, and other loan processing fees. These fees change based on the lender. However, some scammers trick people by collecting these fees and then not giving the loan.
Some cheaters pretend to be lending institutions. When people apply for a loan, they collect the information provided and use it to take loans in the applicants’ names, leaving the victim with a lot of debt.
Lenders usually check if applicants can repay the loan by consulting with a credit bureau, like the CRC Credit Bureau. If they find that the applicant’s credit report is not good, they will not give the loan. However, some groups attract desperate individuals with poor credit reports by promising a guaranteed loan. The applicant pays a fee to make sure their application will be accepted, but they end up getting tricked.
Cheaters contact possible borrowers, pretending to be a real financial institution. They ask for bank account details and security pins if the victim shows interest in the loan. If the person gives them the information, they get tricked.
First Contact Scams
In these scams, individuals are contacted by unknown groups with attractive loan offers without having first applied for any loan. This usually happens through phone calls, SMS, and various online channels.
How to Protect Yourself from Loan Scams
There are some warning signs that will help you spot fraudsters quickly. Also, you should take some safety measures to make sure you do not fall victim:
- If there are any fees for processing the loan, ask for the fees to be taken out of the actual loan amount when it is given, instead of choosing to pay the fees upfront.
- No real lender will push you into taking a loan. Always make sure that you are given standard terms and conditions. Be careful of lenders and loan offers that seem too good to be true.
- Real financial institutions will always check your credit history before approving your loan. So, any lender that promises a 100% approval rate, doesn’t have clear repayment terms, or isn’t interested in checking your credit report is likely trying to scam you.
- Always look for online reviews, and make sure that the business is well-known.
- Only scammers will ask for details about your ATM card or other such sensitive information during the loan application process. The usual information needed for a loan application includes:
- Proof of identity: Name, age, address, phone number, ID card, BVN.
- Proof of income: 6 months bank statement report.
- Utility bills: rent, PHCN bills, or water bills.
- Credit report (Which the lender usually gets from the credit bureau).
- Stay away from unregistered lenders. Real lenders are insured by the Nigeria Deposit Insurance Corporation (NDIC) and regulated by the Central Bank of Nigeria.
If you have been caught up in suspicious activity, be sure to report the issue to your bank right away, and also bring the case to the Economic and Financial Crimes Commission (EFCC).