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How to Avoid Being Scammed With a Bad Credit Loan

avoid bad credit loan scams


Many people turn towards bad credit loans because they don’t have an optimal credit score to apply for a standard loan. Unfortunately, more and more Aussies get scammed by fake lenders that promise a certain loan, in exchange for some charges.

There is a number of fake loan offers on the market, and figuring out which ones are legitimate or not is quite difficult. The process used by scammers is remarkably similar to the one employed for regular bad credit loans. So, you should keep an eye out for the following signs:

  • Pay attention to the way in which they contact you

You may receive a call, or get an email from a company that is willing to give you bad credit loans, out of the blue. Keep in mind that they will sound convincing and will offer some sort of proof that they are legit, such as an address or Australian phone number.

  • Be aware of upfront fees and charges

Take a step back if somebody asks you to make any type of payment, such as an initial repayment, insurance or tax. These kinds of payments are usually made after you’ve received a loan and not before. The higher the amount requested, the more sceptical you should be.

  • Consider the loan amount offered

First of all, you can’t just receive a loan, if you didn’t apply for one. Although commercials for bad credit loans are real, getting a very high loan amount is not possible.

Furthermore, if you’ve applied for a smaller loan, but the lenders try to talk you into receiving a bigger loan and continue to harass you, the chances are that you’re being scammed.

  • Take a look at the interest rate

It’s true that lenders are always in competition with each other and that the interest rates have gone down quite a lot over the last few years. However, there are some limits to them.

A lender that makes you a “once in a lifetime deal” is probably a professional scammer that uses that low-interest rate in order to steal your money.

Tips on How to Verify the Lender and Not Get Scammed

  • Call the number you’ve been given in the offer. Usually, scammers will provide a phone number, but won’t also afford to pay the costs of hiring someone to answer it.
  • Look at the ASIC’s list and see if the lending firm is listed under the unlicensed companies. This is the simplest way of finding out about the firm’s history.
  • Verify if the company is on the Professional Registers list, given by ASIC. If the business is legitimate, it will appear in the records; if not, you’ll know you’re being scammed.

Bad credit loans are commonly used by scammers to trick people. They rely on those individuals who are having money problems and can’t afford to take on a standard loan. Next time when a lender tries to offer you a loan, make sure you verify the source first.