A personal loan is an unsecured financial instrument that is very common in India. In a Personal loan, the lender is the one that takes all the risk. Lender Verification is an important factor when it comes to loan. The borrower, on the other hand, has to pay high-interest rates for availing of the loan. You can avail of personal loans for any personal expenses. It can be for an emergency or just for basic needs to maintain a healthy balance in the accounts.
Emergency expenses can be medical expenses, hospital bills, tuition fees, etc. Basic needs are shopping, travel, hotel bills, etc. In such cases, a person can apply for a personal loan. Although the risk and exposure of the lender are very high in Personal Loans, there are other ways a lender may try to cheat the borrower. Like fake deposit of funds in the user’s account, hidden charges in EMI’s, excessive penalty for foreclosure of the loan account, etc. It is the borrower’s responsibility to make sure to choose the right lender for themselves.
There are a few things that a borrower can do to verify the legitimacy of the lender:
1. Go through the lender’s website: Today, you can easily apply for Personal loans online. The borrower must thoroughly check through the website of the lender. Fake or illegitimate websites looks fishy. There may be basic spelling mistakes and many pop-up links, which are never there on an authentic website.
You can notice the differences between a fake and a real website. A real website of a legitimate lender shows all the data in a proper and customized manner without any pop-ups and ads. Then there are many links on a fake website that may not be working or has no data. The contact details on the page may also be fake and unreachable.
You must also ensure that the website is safe to open and has the necessary copyrights. You can find such information on the Home page of the website.
2. Look for the reviews: Most lenders display customer reviews on the front page of their websites. When you apply for personal loans online, you can quickly go through the reviews of other customers. However, it is easy to manufacture fake reviews. So, the borrower’s research must be thorough. You should read the reviews of other customers and see if they are similar or have repetitive words in them.
You can also check with other people about the name of the company. Lenders market their company through various modes, and someone must have heard of the lender. It will give you the satisfaction to move forward with the lender.
3. Read the terms carefully: One should never rush these things and make impulsive decisions. There are fixed criteria for availing the loan, and if the lender is not sequentially following the procedures, you should be alarmed. Alarmed here means you should read the terms of the loan very carefully. You may find something fishy in the documents.
In most cases, the borrowers choose to repay their loans in EMI’s. EMI is nothing but repaying a certain amount in a fixed time, in equally divided parts. So, it gets very easy for the lender to add hidden charges in the EMI’s. If the borrower uses the auto-debit option, he may not even determine how many extra charges he is paying. Therefore, transparency is crucial in the loan process.
4. Find the physical location of the lender’s office: Although most lenders provide the facility to apply for personal loans online. Still, every company has at least one main headquarter. If not visit, you should at least find out where the lender’s headquarter office is situated.
With the technical era at its peak, companies must offer their services through online mode. But with the rapid advancement of technology comes the drawbacks. It is easy to engineer a fake website and fool a person. Therefore, a borrower must ensure that the lender has a physical presence somewhere in the country.
You must take precautions:
These are some of the basic precautions you can take to verify your lender. The borrower needs to verify the legitimacy of the lender. Not doing so can create a lot of problems for the borrower.
You should not apply for a loan instantly because the lender provides the loan at very low-interest rates. As mentioned above, it is quite easy for the lenders to add any extra charges that they may not disclose openly with the borrower.
Even though our country has strict regulations for lenders and their practices, it is still the borrower’s responsibility to do their due diligence to avoid any mishap.