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How to avoid scams on unsecured loans

Unsecured loan scams aren't particular to one company. Although there is no set of blacklisted sites or providers available there's a few things you can look out for to ensure the provider you use is legitimate and professional.

 

Terms and Conditions

First and foremost, before using any unsecured broker service or loan company, check the terms and conditions. You're bound by these terms whether the company is legitimate or not; if you sign up for a loan and find yourself charged for whatever reason or out of pocket, but this was stated in the terms and conditions, you'll probably be stuck. When you sign you agree to the terms and conditions, so always read these first.

 

Check the Company

Check the company's registration number on Company House and check the regulating authority. If they say they're regulated by a certain finance authority, check this and make sure their regulations are correct; data protection acts don't regulate the company's financial advise or practice, they only "protect" your information. Google the company's name and check forum posts from people who have used the company to ensure they offer good customer service; even if the company isn't a scam they may still provide bad customer service and charge customer's against their knowledge.

 

Avoid Providing Card Details

If you're not sure whether the company is legitimate then don't provide your bank details. Do not provide details over the phone to cold callers, especially those who "guarantee" to provide you with a loan for a fee; these companies are brokers, not providers, and will charge an upfront fee in the hopes you don't know your rights. Although some brokers provide a good service you should always request the terms and conditions beforehand. Some brokers take the fee and provide a list of unsecured loan providers you could have found yourself, and you're still not going to get a loan contract, only the pre-approval contract which does not guarantee a loan. By law if a broker does not secure you with a loan in 6 months you're entitled to all but £5 (in some cases) of your fee back, but the company won't tell you this unless they're professional and properly regulated. They'll also take the fee before you secure the loan if they're not properly regulated, which can be difficult to recover in the future.

 

Check Data Protection Conditions

When providing your personal information to a company make a note of their name, registration and whether they are covered under the data protection act. If you do not agree to have your information shared and this is not stated in the terms and conditions then you should not receive cold calls from unregulated companies or even regulated companies. Many people find that applying for loans leads to regular cold calls, texts and e-mails, some of which are from scam sites. Don't let other companies get away with sharing your information if they said they wouldn't.

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