New Westminster residents will want to take note that loan scams are on the rise in Canadian communities, putting a large population at risk each year of having their hard-earned money taken.
In fact, millions of dollars have been lost to all types of financial scams over the past two years, reports the Better Business Bureau of Canada.
The scariest part?
Once the money is lost to a scam, recovering it is next to impossible. This is a high price to pay for a simple yet common mistake.
Canadians count on loans
Having the ability to access lenders can be life-changing. A loan approval can wipe away financial woes for many, providing a way to pay essential, outstanding bills and put food on the table.
Cue the private online lenders.
Private online vendors have improved the financial landscape for many. Often, these web-based resources are more willing to help people experiencing financial issues or those with denied loan applications from mainstream branches access the funds they need.
However, the increase in online loan vendors has also spurred the number of personal loan fraud cases. Recognizing the common signs of a loan scam can be the easiest and best defence against shady lenders.
How can you detect a loan scam?
When you’re asked to pay up
A recent Loans Canada survey revealed that approximately 45 per cent of credit-constrained Canadians who believe they’re financially savvy agree that alternative or online lenders are allowed to ask for upfront payment because it adds additional security.
This could be a costly mistake.
Licensed lenders never ask for money upfront. In fact, illegitimate lenders will ask for a processing or insurance fee as a condition for approval. Don’t fall for this. Be on alert if you’re asked to transfer money as a method to secure a loan.
Life has no guarantees, and neither do loan approvals. An authorized lender will verify applicant information and evaluate credit before making a decision. When lenders guarantee approval, it’s just a scam to lure in applicants and collect upfront fees.
Guaranteed approval is a scam. Find out why here.
Pressuring applicants to commit quickly
Often, scammers will put pressure on loan applicants to decide quickly. This leaves little time for the applicant to realize they’re being swindled. Be careful of any tight expiration dates as they can be a sign of a scam.
Do they have an office?
Loans Canada’s survey also confirmed that credit-constrained Canadians rarely call vendors to pose questions and do more research when taking out a loan.
If a company has a lack of presence in the real world, it’s likely a sign something might be awry. Search out independent information on the lender and double-check if they have an actual office with a legitimate address.
Knowledge is the best way to protect yourself
Loans Canada advises Canadians to research lenders, search out verified sources for reviews and discuss applying for loans with trusted friends or family members. These are all ways that Canadians can arm themselves with more information, which will ultimately help them avoid falling for a loan scam.
“Over the last few years loan fraud has been on the rise,” says Loans Canada Chief Technology Officer, Cris Ravazzano. “Loan scammers impersonate many online lenders and similar websites, duping Canadians into paying to qualify for fraudulent loans. We want to bring awareness to this issue to help inform and protect potential victims of this fraud.”
Have you been scammed? Now what?
Once a scammer takes your money, there is a very low chance you’ll ever get it back. However, if you’re suspicious that a lender might be fraudulent, contact your local police and the Canadian Anti-Fraud Centre.