Secure Yourself From Loan Fraud in India
01 January, 2024
With the rise in credit inclusion, getting loans has become easier for everyone. You might have received multiple messages portraying that you are eligible for a pre-approved loan of a specified amount. While it’s a leap towards financial and credit inclusion, it also significantly increases the risk of people falling victim to loan fraud. This article offers insights on staying safe from such financial pitfalls. So, let’s begin with understanding loan fraud!
What are loan frauds?
Fraudsters usually employ multiple ways to conduct offline and online loan frauds, including but not limited to the following:
1) Phoney loan offers
Fraudsters often use enticing advertisements or unsolicited calls to provide pre-approved loan offers. They might even promise quick and easy loans with minimal documentation. These offers may come with hidden fees, exorbitant interest rates, or non-existent loan terms. This can put you at significant financial risk.
2) Identity theft
You can fall victim to identity theft, where fraudsters use your stolen personal information to apply for loans in your name. This goes undetected in most cases as there is only one way to check what loans are running in your name, i.e., a credit report. Most people get to know about the details in their credit report only when they apply for a new loan. By that time, the damage has already been done. That’s why it’s always advised to check your credit report at least once each year.
3) Advance fee scams
Fraudulent lenders may offer enticing loan offers and request upfront fees for loan processing, insurance or other fabricated charges. Once you pay the requisite amount, the fraudsters will disappear without giving you the promised loan.
4) Impersonation
In cases of impersonation, fraudsters might pose as authorised representatives of banks or financial institutions. They can trick you into providing sensitive information over the phone or online. They can then use this information to initiate fraudulent loan applications in your name.
5) Loan modification scams
Individuals facing financial difficulties might become the target of such scams. They are promised loan modifications, whereby certain terms can be relaxed, new facilities may be provided or interest rates may be reduced. Fraudsters may charge hefty fees for these types of promised services and will disappear after receiving this amount. Mortgage fraud / Home Loan fraud is common in this category, as these are long-term loans.
How to stay safe from loan fraud
Above are some of the common ways in which you can become the victim of lending fraud. If you want to stay safe from these scams, here are some tips you should remember:
1) Verify lenders
Before engaging with any lender, you should verify their legitimacy by checking for valid licenses and reviews. In most cases, reputable financial institutions always have an online presence and you can search for their existence online or through third-party websites. You can also visit their physical offices to verify their authenticity.
2) Never pay upfront fees
Legitimate lenders do not ask for upfront fees. And even if asked for, the fees will be nominal in most cases, for instance, login fees. You should be cautious of any request for payment before the loan gets disbursed. You should research and confirm the legitimacy of any charges associated with the loan.
3) Secure your personal information
You should always strive to protect your personal information, such as Aadhaar details, PAN card information and bank account details. Always avoid sharing sensitive information like one-time passwords (OTPs) over the phone or online.
4) Check your credit report regularly
As stated earlier, the only means to know all the credit facilities sanctioned in your name is through your credit report. Therefore, it is imperative to monitor your credit report regularly to detect any unauthorised loan applications or discrepancies. You should promptly report any suspicious activity to the concerned credit bureau and financial institution.
5) Educate yourself
Staying informed and aware of common lending fraud tactics and scams is the best way to stay safe from these types of activities. Awareness is a powerful tool in preventing fraud.
HDFC Bank's Vigil Aunty ensures that you do not fall into these pitfalls by spreading awareness of the tactics used by fraudsters. She also provides tips and tricks on what precautions you should take to protect yourself from loan fraud.
HDFC Bank’s Vigil Aunty is actively spreading awareness to protect borrowers from fraud. You can learn everything about online loan fraud from her. She will also guide you on how you can stay safe and make informed decisions.
If you need a loan, you should prioritise reaching out to reputed lending institutions like HDFC Bank. With seamless loan application processes and affordable terms, you can get a loan easily and save yourself from the risk of falling into a loan trap. Stay aware and informed with Vigil Aunty!
Join Vigil Army, where Vigil Aunty will decode various frauds and give people a heads-up on the dos and don’ts of combating frauds online. To join the Vigil Army, send ‘Hi’ to her via WhatsApp number 7290030000.
