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Avoiding Loan Fraud

Every year in the UK, billions of pounds are lent to consumers. It is a hot business and therefore, it should come as no surprise that many lenders want a bigger share of this lucrative market. Unfortunately, not all of these lenders are reputable or trust worthy and it can be very difficult and time consuming for consumers to determine which loans are legitimate and which are not.

Excessive interest payments and penalty charges are just some of the unfair practices that dishonest lenders will use against customers. Many of these practices will even be quite legal if they are worded properly in the small print of the lending contract and the consumer has signed them. Even if they are illegal, the cost and time that it would take to reclaim the money in court is prohibitive.

Everyone knows that they should choose their lender carefully and read all the fine print before signing any agreement. While there are many laws protecting consumers, there are still many instances when signing your name to a complicated document, or even to the various add-on forms will make you liable to extremely onerous charges and fees for obtaining credit.

So what can you do to avoid landing yourself in such a scam? Well first of all, use only reputable lenders who you know you can trust. Shopping around is also very important as rates can vary widely for the same product. Shopping around will give you an idea of the rates and terms to expect and any lender who is offering vastly different terms can be discounted.

You should know what interest rates to expect for the size of loan you are considering, and for the repayment period you want. Any lender who is offering a rate far above this can be identified as overcharging but at the same time, beware of lenders who offer very low rates as there may be hidden charges or very onerous cancellation or early repayment fees.

Also, make sure you read all the fine print carefully and only sign once you understand what you are agreeing to. Any inaccuracies should be changed immediately by the lender and only undesirable lenders will try to talk you into terms that were not part of the original agreement.

Finally, make certain that you can afford a loan. Again, the lender should be willing to calculate your monthly repayments and make sure you can afford them. Reputable lenders will not try to induce you into borrowing more than you require or more than you can afford.

 

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