If you were to enter the keywords "personal loan" into Google, it's likely that you will be met with many different lenders. While the Internet is able to furnish us with lenders who are of good repute and offer excellent customer service, there are some who may use more underhand methods to reel in customers.
Watch Out for Upfront Fees
Many of will be matched with different lenders depending on our circumstances and credit rating. Those with a less-than-impressive credit score may feel that they have to take what's available, warts and all. However, there are many genuine lenders available who will try and offer a loan wherever possible.
With this in mind, you shouldn't assume that paying a processing fee or finder's fee puts you in any better position when it comes to being offered a loan. In fact, in many instances, you may find that you're the only one making payments.
There can be genuine fees charged in some instances, such as an origination fee. However, if you have tried suggested lenders without much luck, there's very little chance that those offering a fee will be able to help.
No Credit Check? Try Elsewhere
Credit checks can seem harsh when you first encounter them, with many stating that they do not give a good reflection of current circumstances. However, it's important to note that establishing the identity of an applicant and their ability to repay the loan is vital Can you imagine if everyone was just given a loan and was unable to repay it? Many would be paying more for their personal loans as a result.
If you have fallen at every other hurdle, opting for a company that promises "no credit checks" can be tempting, but it can never end well. Even if you are offered a loan, you could find that the interest rate associated with the loan is much higher than that of genuine lenders.
Those who have a blemished credit history will find that they may pay more interest than someone with a healthier credit score, but this doesn't mean that you should be paying extortionate rates each month for the pleasure.
What Marketing Tactic Does the Lender Use
To be clear, every financial institution will have a marketing plan, as this is how its wins new customers. Carried out in the right way, there is very little wrong with this. The problem starts when the information being given is misleading to the applicant.
While a loan should be appealing to the customer, the terms and conditions have to be clear. So if you feel a loan is being pushed upon you without the company giving you a chance to peruse the terms and conditions, then it is worth looking elsewhere for your personal loan.
Check the Reputation of The Lender
The Internet is the platform many turn to when something goes wrong, as it allows them to air their views without being edited. While some may rate a company unfairly, you can generally build a picture of how professional a finance company is by the reviews left by others.
There are many ways of establishing a company's reputation. Some may visit the company's social network pages, whereas others may use dedicated review portals such as Trustpilot. Investing a few minutes into researching your potential lender can ensure you don't fall foul of an unsavoury lender.
Have Unknown Applications Appeared on Your Credit Report?
There are companies out there who will portray themselves as a loan company that guarantees to get you results, but this is a bold statement to make if you're not aware of each applicant's details. Often is the case that these establishments are nothing more than a broker who will use your details to apply for several different loans, each leaving an impact on your credit file.
If you feel that there has been unauthorised loan applications made in your name, you should contact the police, and also the credit reference agencies to ensure that your information is updated, as this could affect your ability to get an official personal loan later on.
Can You Determine the Company's Location?
A genuine loan company will have no issue in supplying with contact details, whereas those trying to reel you in may be a little hesitant. There's no real reason for a company to withhold their contact details or office location if they've nothing to hide.
Some companies may be nothing more than a flashy website filled with buzzwords, so it's vital that you're able to confirm that they're legitimate before making any financial commitment.
You can also check the Companies House website to ensure that the company has been registered. All the details of the company will be registered here, so if you can't see them, then it's unlikely that such a company exists.
Have You Been Threatened With Legal Action For Refusing a Loan?
If you've taken the time to carry out research on a lender and feel that the loan isn't for you, you have every right to refuse it. More unscrupulous lenders may state that you are either legally obliged to take the loan, or have to pay a fee as a result when in fact neither is true. Those who take out a personal loan actually have a cooling-off period of 14 days, so there's never any legal implications unless you take out the loan and fall behind on payments,
Although there are things to look out for when applying for a personal loan, it shouldn't be overlooked because of the more unsavoury companies. Companies that operate in this very rarely last long, and as advised, the Internet can be used to check the legitimacy of a company within a manner of minutes.
If you have a poor credit history, have a look at our article on personal loans for bad credit. Hopefully we can guide you in the right direction on getting a loan when you have been refused one becuase you have a less than perfect credit history. Or maybe have a read through our article on using a Personal Loan to Reduce Interest.