1. Upfront fee or payment demand
A legitimate lender will deduct processing or other charges from the sanctioned loan amount, not ask you to pay before disbursal. If you are asked to transfer a ‘fee’, ‘insurance’, or ‘registration’ sum first, it’s a major warning sign. Try to avoid such a lending institution; understand that it is also your responsibility to protect your rights and distinguish between what is correct and what is not.
2. No credit check or unrealistic approval
If a lender promises you a loan with zero documentation, no credit history verification, or ‘instant approval’ regardless of your profile, be wary and don’t fall for lucrative offers easily. Genuine lenders will never provide you with a free loan; they will conduct a solid background check on your creditworthiness.
3. Pressure to act immediately
Scammers often create a false sense of urgency: ‘offer ends today’, ‘limited seats only’ or ‘you must pay now’ to clear your loan application, etc. Any such urgent-looking messages and pressure tactics should be carefully scrutinised. Authentic institutions allow you time to review terms and conditions.
4. Lender is not registered or listed with the RBI
Carefully check whether the lender is registered with the RBI or is an RBI-authorised NBFC. If not, you’re dealing with a high-risk entity. Never ignore this simple fact. If needed, reach out to government institutions such as the Ministry of Finance or the Reserve Bank of India to raise a legitimate concern and obtain clear answers before proceeding with a personal loan application from any loan disbursing financial institution.
5. No physical address, contact details, or credible website
A genuine lender will provide a verifiable address, customer service number, and have a traceable online presence. Absence of such details often means trouble. It is extremely important to review the experiences of past customers and, if possible, discuss the same in person.
6. ‘Too good to be true’ offers
Shockingly low interest rates, promises of large loans with minimal income proof, or ‘guaranteed approval’ are signs of fraud. Always ask: Why would a lender do this? Understand that the loan distribution terms of legitimate lenders are the same for all borrowers.
7. Requests for sensitive information or odd permissions
Sharing your bank account details, OTPs, Aadhaar/PAN over chat or phone, or allowing an app excessive access (contacts, SMS, media) are dangerous. Scammers use these for identity theft, fund misappropriation, or harassment.
That is why you should focus on staying safe before applying for any personal loan. Take a pause and verify the lending institution, and read all the terms and conditions thoroughly before rushing ahead with any loan application.
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