Loan Scams are a real thing in South Africa, and daily we hear of or deal with individuals that have fallen victim to these fraudsters. With the economic impact of Covid-19, the struggles it has brought to families, and with the average person not knowing enough about the industry, this has created a stepping stone for these fraudulent credit providers to pray on South Africans.
The National Credit Regulator (NCR) does not allow for credit providers to request or demand up-front payments.
If you are being asked to pay any upfront fee, such as but not limited to an administration, attorney, insurance, or processing fee, do not engage further with the credit provider.
Take our company SA Cash Loans – when making use of our loan service, we will never charge applicants a single dime for our service. Whether you have received a personal loan through one of our credit providers or not.
Interest rates that are too low
These fraudsters prey on the unadvised and lure them in with loan offers with nominal interest rates, normally ranging from 3% to 5% that for the uninformed looks like a great deal as reputable credit providers normally start from a 15% interest rate for loans.
Identifying the company
Many of these so-called credit providers use a ‘clone company’ claiming to be the real thing, yet they are easily identifiable as a fake.
Reputable credit providers and broker agencies, like ourselves, make use of emails from a registered domain and landlines. So, if you are being contacted by someone making use of a Gmail, Outlook, or Yahoo account or send you an SMS or WhatsApp with a mobile number to contact them back, you should be wary.
Being pressured to act
You will often find that these so-called credit providers will employ tactics such as to pressure you into acting quickly and without forethought. All of this is done so that you do not have the time to identify them as a fraudulent company.
If at any time you are being pressured, or you start hearing the words ‘limited time loan offer’ or ‘special’ to urge you to make a decision, rather step back and ask yourself why would a reputable credit provider try and force their potential client into making such a rash decision.
No credit checks or ‘Debt Review’ welcome
No reputable credit provider will provide a loan to any person without first performing a credit and affordability check, which is done to ensure that they can provide a risk-free loan to the client.
Furthermore, while under debt review you cannot access additional credit in the form of a loan or credit card. This is to ensure that you can finally take financial control.
If you are offered a loan while being under debt review, be wary as these companies are looking to make money from your vulnerability.
To put all of this information into a checklist that you can easily see if the loan offer you received could be a scam;
- You are being charged upfront fees.
- The interest rates are low compared to other known reputable credit providers.
- You are not able to identify the person as an employee of the company or identify the company themselves.
- The credit provider employs tactics to try and pressure you into making a decision.
- The service is normally advertised as no credit check or debt review welcome services.
Now, we are not saying that any reputable company could not meet any of the above criteria, but our experience with some of these fraudulent companies that scam people through their loan services is always that some if not all of these checks are met.
We leave you with this final word of advice, if it sounds too good to be true, it is most likely too good to be true and we urge you to review all information regarding the loan offer and credit provider before making your decision.