How to Find Out if a Loan Company is Legitimate
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Getting a loan, at least once, is a necessity for most Canadians. Whether you need to get a car, want to buy a home, or simply need some extra cash to cover an emergency, loans are an integral part of our lives. While getting a loan is generally a straightforward process, one of the most difficult things is choosing who to get a loan with. Different companies will have different terms, rates, policies, and more.
Why do different lenders offer different mortgage rates? Find out here.
However, there are some things to make sure you look out for when trying to secure a loan. One of the most important is to make sure that the company you want to work with is legitimate. Unfortunately, there are people and companies out there who make their living performing loan scams on unsuspecting consumers. Of course, if you are going with a big company that you know about and have worked with, you don’t need to worry, but there are tons of smaller and lesser known companies out there that you can’t be quite as sure about.
Loans Scams 101
These loan scams can vary from ones that try and get you to pay an advanced fee, to ones that simply want to get your personal information. Either way, getting scammed is in no fun at all, even more so for loan scams. This is because the scammer not only takes your money but also takes your personal and private information.
Watch our video to learn how to identify a loan scam.
We have all heard or seen horror stories from individuals who have dealt with loan scams, but how can we be sure we are not the ones to be scammed. Well thankfully, there are a few things you can do. Now, even if you follow all of these tips and steps, there is no guaranteeing that scams will not happen to you. Ultimately, you need to trust your gut and judgment when it comes to things like this. However, we can provide you with a few pointers to help you find out if a loan company is legitimate, or if they are just trying to scam people.
Watch out for your wallet! Here’s a list of the top Canadian financial scams.
Here are a few things to do, ask, or seek out in order to ensure that a loan company or loan offer itself is legitimate or not.
Do Some Online Research
The first thing you should do when you are trying to find out if a loan company is legitimate is to do some online research. Heading over to Google and looking up the company name is a good place to start. This could give a ton of information about the company themselves, but also what others are saying about the company. However, just because they have a site and testimonials doesn’t mean it’s legitimate. These are easy to create and make-up. If you see posts questioning, asking, or telling that they are a scam, it is best to tread lightly and heed the advice of others. If they have a site and you’re still not sure whether to believe them or not, you can run their name and sites through services like the Better Business Bureau. These will give you more information about the company and if they don’t have a BBB page at all, it is best to avoid them.
Make Sure They Have an Actual Office and Real-Life Presence
Sure, a nice site and testimonials are great, but there is nothing like a real office, phone number, and offline presence. If the loan company you work with has an office and employees and a customer service phone line, it gives you that little bit of extra reassurance that they are a legit loan company. If the company has no office, has no evidence of real employees and provides no phone number, you should probably look elsewhere, as there is no way for you to confirm that they are indeed a real loan company. While there are plenty of legitimate online-only loan companies, you have to be cautious in that space as it can be hard to differentiate between ones that are legitimate and which ones are not.
Also, beware of the fake Canada Revenue Agency scam.
Be Wary if a Deal is Too Good to be True
We all want the best deal when it comes to getting a loan, but we also need to be realistic. If a loan company is promising you an outstanding deal, better than everywhere else, you should be wary. If you have to ask the question “is this too good to be true?”, it probably is. You should trust your instincts and go elsewhere. If a company can actually offer deals as good as they say they can, you would likely have heard about the deals and the company would have some press.
For information about reverse mortgage scams, read this.
Watch Out For Upfront Fees
This is one of the clearest and easiest ways to tell if a loan company is illegitimate. A legitimate loan company will never ask you to provide a payment or pay a fee before you actually receive your loan, so if they ask you to do so, you should cease communication with them. No upfront payment will ever guarantee you get a loan, so don’t fall for that either.
Click here to learn how to avoid loan insurance scams.
Take the Loan Agreement to a Lawyer or Other Professional
Before you agree to sign anything, you should have a lawyer look over the contents of the agreement. If the loan company objects to this, that is a huge red flag. Going with a lawyer is always a good idea as they might be able to catch things that you may have missed. Once they give you the go ahead, you should feel good knowing that you have done all you could to prevent yourself from getting scammed. However, there are never any guarantees as scammers are sadly getting better and better at making their operations look legit.
If you follow these tips religiously and go with your gut instinct, there is a good chance you will be able to avoid getting scammed by an illegitimate loan company. It is sad that these companies even exist but they do. They prey on those who need the money most, which is a terrible thing. If you have been scammed, it is a good idea to report it to your local law enforcement right away. While there is a chance you won’t get your money back, hopefully by reporting it, the authorities will be able to locate and shut down the individual or company that is tricking people with loan scams.
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