How to Recognise and Avoid Personal Loan Scams?

13 May, 2025

Synopsis:

• Personal Loan cheating is on the rise and it is important to stay vigilant.

• Scammers use various methods to conduct loan fraud.

• Avoiding unsolicited calls, not share account information and not paying up front are some ways to stay safe.
  
  

Personal Loans are an easy way to meet financial needs. However, scammers have found ways to misuse this convenience. Loan fraud is on the rise in India, and individuals must stay vigilant. Knowing how to spot, avoid, and handle Personal Loan frauds can save you from significant financial loss and mental stress.

How Do You Identify Personal Loan Frauds?

Recognising loan scams is the first step to staying protected. Here are some common warning signs:

• Unsolicited Loan Offers

If you receive unexpected calls, emails, or messages offering instant loans, be cautious. Legitimate lenders rarely approach customers this way.

• No Verification Process

Genuine financial institutions verify your credit score, income, and identity before approving a loan. Scammers often promise loans without asking for any documentation.

• Upfront Fees or Charges

Fraudulent lenders may ask you to pay a "processing fee" or "advance fee" before disbursing the loan. Legitimate lenders deduct charges after the loan is approved, not before.

• Pressure to Act Quickly

Scammers use urgency to push victims into making hasty decisions. They may claim the offer is valid "only for today" or "for a limited time."

• Unregistered Lenders

Verify if the lender is registered with the Reserve Bank of India (RBI). Unauthorised companies are often scams.

• Too-Good-to-Be-True Deals

Be cautious of offers that promise high loan amounts with extremely low-interest rates, especially if your credit score is average.

• Unprofessional Communication

Scammers often use poor grammar, unprofessional email formats, or unofficial email addresses. Watch out for these signs.

• Demand for Sensitive Information

If a lender asks for your bank details, passwords, or OTPs, it’s likely a scam.

How to Check if You Have a Fake Loan in Your Name?
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Here’s how you can find out:

• Regularly check your credit report from credit bureaus. Look for unfamiliar loans or inquiries.

• Monitor your bank statements carefully for unusual loan-related transactions, repayments, or deductions you didn’t authorise.

• Investigate unexpected loan messages or calls. If you receive communication about a loan you don’t recall applying for, contact the lender directly to confirm its authenticity and take necessary action.
  
  

What to Do If You’ve Fallen Victim to a Loan Scam?

If you’ve already been scammed, act quickly to minimise damage:

• Stop all communication with the fraudster immediately.

• File a complaint with the National Cyber Crime Reporting Portal (cybercrime.gov.in) or your nearest Cyber Crime Cell.

• Notify your bank about the scam to prevent further misuse of your account.

• Request a freeze on your credit report to prevent scammers from taking more loans in your name.

• Share your experience with friends and family to help them stay alert.
  
  

Stay Aware To Be Safe From Personal Loan Scams

Personal Loan scams in India are becoming increasingly sophisticated. Staying informed and cautious is your best defence. Always verify the legitimacy of a lender and never rush into financial decisions. By following the steps outlined above, you can protect yourself from falling victim to Personal Loan fraud.

FAQs
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Can scammers fake official lender websites?

Scammers can create fake websites that resemble official lender sites. These websites often have slight spelling differences in the URL or lack HTTPS encryption. Always double-check the URL and look for security indicators like a padlock symbol before entering any personal information.

What should you do if you have already paid upfront fees to a scammer?

If you’ve paid upfront fees to a suspected scammer, take immediate action:

• Contact your bank to block the transaction if possible.

• File a complaint with the local police and the cybercrime cell.

• Gather all evidence, such as payment receipts and communication records, to support your case.
  
  

Are loan offers through social media legitimate?

Loan offers received via social media, or text messages are often scams. Legitimate lenders rarely promote loans through informal channels. Avoid clicking on suspicious links or sharing personal information through these platforms. Always apply for loans directly through verified lender websites or authorised apps.

*Disclaimer: Terms and conditions apply. The information provided in this article is generic in nature and for informational purposes only. Loan disbursement is at the sole discretion of HDFC Bank Limited and is subject to verification and documentation as per the bank’s requirements. Interest rates and offers may vary. Please check the official website for the changes/updates in the application procedure and other details.