Contemplating a loan? Here's how to shield your wallet from potential scams

Fraud foe guide: In an era where loans have become essential for various financial needs, India is grappling with a surge in fraudulent activities within the lending sector. With over 13 thousand reported cases of banking and loan fraud across India in the fiscal year 2023, businesses and individuals find themselves ensnared in a web of deceptive practices.

Various schemes of loan frauds in India include identity theft, false documentation, Ponzi proposals, loan flipping strategies, pay-in-advance fraud, forgery, false loans, and collusion between lenders and borrowers. An intriguing facet of this issue is 'Ghost Lending,' where borrowers secure loans using counterfeit documents or, in extreme cases, adopt the identity of deceased individuals.

Borrower's defence blueprint

Scrutinise the lender: Undertake a meticulous examination of the lender's credentials, ensuring accreditation by regulatory bodies like the Reserve Bank of India. Investigate customer testimonials, complaints, and delve into the lender's official website to comprehend loan offerings, charges, and interest rates.

Verify loan documentation: Thoroughly inspect loan agreements before affixing your signature, ensuring the utmost clarity on terms and conditions. Validate the accuracy of personal information, seeking elucidation from the lender or legal counsel if any aspect appears ambiguous.

Confirm personal data: Validate the accuracy of all personal information submitted to lenders, including identity, residence, date of birth, and employment details. Regularly monitor credit reports to identify and rectify any anomalies or unauthorised accounts linked to your name.

Exercise caution with up-front costs: Exercise prudence when confronted with lenders demanding upfront fees. Reputable lenders typically subtract any costs from the loan amount post-approval. Remain vigilant if a lender insists on fees before formal loan approval, as this may signal potential fraud.

Steer clear of high-pressure tactics: Exercise caution when lenders resort to high-pressure tactics to expedite decisions or coerce borrowers into hastily signing loan documents. Legitimate lenders afford borrowers sufficient time for a comprehensive review of terms and conditions.

Fortify online security measures: Enhance online security by utilising secure networks when applying for loans. Be wary of phishing attempts through unsolicited emails or calls, and fortify account access with two-factor authentication and robust passwords to thwart unauthorised access.

Seek legal guidance: Engage legal advisors to gain a comprehensive understanding of loan terms, verify the legitimacy of the lender, and scrutinise contracts for potentially adverse clauses. Legal counsel can also provide insights into legal rights and options in case of disputes.