Personal Finance

Illegal and Irresponsible Lenders: How to Avoid?

You’re starting a new business but not sure where to start when it comes to financing it. Navigating this area can be scary, not knowing how to identify the difference between safe or unsafe options. However, before you give up on starting your dream business out of fear of the unknown, you must know that it doesn’t have to be all so hard to figure out. You can start your research by browsing through reviews accumulated by Reviews Bird from real people with real experiences with companies. By learning what others have to say, you can gauge whether a company can meet your business needs, whether its corporate culture resonates with you and whether it is reliable.

Reviews about finance companies will only be posted by people who find it essential to either post a good or bad review about a company. In addition, honest reviews will only derive from a real experience and not over petty complaints.

How do I Identify Illegal Lenders?

Also known as predatory lending, illegal lending is the act of lending organisations conducting unethical practices without authorisation. These corrupt practices consist of lending loans to borrowers and charging them a high-interest rate with strict terms regarding consequent collection upon failure to pay the loan. In addition, illegal lending is a white-collar crime committed by luring consumers into thinking they are getting a great deal from a loan when caught in a scam. Furthermore, these loan sharks operate outside the law by targeting consumers with low personal or business credit at inadequate standards that are easy for loan sharks to target. However, you can spot these illegal lenders using a few guidelines:

  • Check the financial services register for organisations authorised by the Financial Conduct Authority (FCA)
  • Illegal lenders deal with cash and will not give you a formal agreement
  • Loan sharks do not conduct credit checks
  • With such high-interest rates, you cannot pay your debt off in full, causing you to loan more money and be forever indebted to the loan shark.

What To Do During an Illegal Lending Scam

During an illegal lending scam, you will have safe options to deter away from the illicit lending organisation. If you feel that you have been a victim of fraudulent activity, the first step to follow will be to immediately stop any contact with that illegal entity. Next, you should contact your bank provider to ensure that your account is still secure. Furthermore, you will need to contact your bank provider’s fraud department as soon as possible to report the scam. This will notify them to keep a close eye on the activity on your account. Moreover, you should consider checking your credit report profile immediately if any retail accounts, loans, or credit cards have been applied for in your name without your consent.

Types of Loans Scams to Avoid

The most common types of loans scams can seem easily accessible to the individual without proper research. These loans may consist of car loans, cash advance loans, overdraft protection loans, and student loans. As mentioned before, loan sharks tend to target individuals with low incomes, so it is essential to always research a loan company before giving any personal information away.