But as it turned out, neither did he receive any loan nor did he get the money back.
What is the modus operandi?
The 33-year-old complainant had applied for a loan to set up his firm and paid ₹1.35 crore as the processing fee. The company that collected this money was supposed to send a team for inspection before the loan disbursal, but as it turned out, this did not happen.
Meanwhile, such cases are not uncommon. Several loan seekers—big and small—tend to fall into the trap of fraudsters in pursuit of a loan.
Here, we share some useful tips that borrowers are advised to follow to protect their money.
4 money lessons one can learn from this incident
I. Traditional players: There are a dime a dozen traditional players, such as banks and non-banking financial corporations (NBFCs). Ideally, one should approach them for a loan unless there is some unique situation, such as a lack of a credit report or a poor credit score.
II. Everything should be on paper: Another thing to be careful about is putting everything in writing. Before any money moves from one account to another, there should be a proper loan agreement between borrower and lender.
III. Processing fee is deducted: Typically, lenders deduct the processing fee from the loan money before disbursal. This fee does not need to be paid separately in advance for loan approval, as happened in the case mentioned here.
IV. Say no to unauthorised agents: There are several agents of financial institutions who facilitate the approval of loans in return for commission. One should make sure to say ‘no’ to any of these unauthorised agents. However slow the process is, one should stick to the formal channel instead of approaching through an unauthorised agent.
Disclaimer: Mint has a tie-up with fintechs for providing credit, you will need to share your information if you apply. These tie-ups do not influence our editorial content. This article only intends to educate and spread awareness about credit needs like loans, credit cards and credit score. Mint does not promote or encourage taking credit as it comes with a set of risks such as high interest rates, hidden charges, etc. We advise investors to discuss with certified experts before taking any credit.
