The internet has made everything easier. You might consider yourself a techie and be comfortable with your activities online. But it becomes high-risk when applying for an online loan. You need to give sensitive information to an entity or somebody you might not know, and you’re likely taking a large amount of money.
The safest way to take out an online loan is to keep a keen eye on potential red flags and ensure the lender you’re dealing with is reputable. Essentially, you risk two major consequences by taking an online loan.
- Losing money: Lenders cab promise the world, charge exorbitant fees, and yet you might not get what you paid for.
- Paying too much: Even after receiving the loan, you might end up spending more dollars than necessary on a high-interest rate.
Additionally, you might expose yourself to identity theft. This happens when the personal information you submit to a website is collected with malicious intention. Items commonly needed in loan applications are especially useful to identity thieves.
Picking the Right Lender
Dealing with a legitimate lender will help you avoid most of these problems. As such, always look up the lenders you are considering and consider their reviews both negative and positive. However, remember that not everything you read online is true. Most of the reviews might be from con artists or employees of the lender. Therefore, it is safer to seek reviews from an impartial source you can trust.
Before you apply for an online loan, check for complaints with the Ministry of Government and Consumer Services which keeps a database of financial product complaints. The complaints are posted online usually within 15 days.
Consult trustworthy referrals from sources that aren’t just shills for the lender. Ask your friends and family about their experience, and how the application process was for them. High-quality podcasts and websites might offer gainful insights. The more trustworthy the source, the more confident you will be when applying for the loan.
Less reliable sources you should avoid include:
- Random email: This is not a good source of such information. Spammers also do send millions of emails and you might never know who the other party is. The same goes for a random mail that pops up in your mailbox.
- Unsolicited calls: Even if the calls appear to be from a local number, the caller might be on the other end of the world. With the online tools, anybody can get a local phone number.
If the lender is not a household name, proceed with extra caution.
Watch Out for Red Flags
Many are times that online fraudsters give themselves away. When you start interacting with an online lender pay attention to how they operate before giving out your personal information or paying any fee. Should you observe any of the red flags below, it’s time to look for a new lender.
- Upfront fees: Most reputable lenders don’t ask for upfront fees. There are legitimate loans that cost to apply, but such kinds of fees are disclosed in the official documents.
- Guaranteed approval: Lenders are in business, so they can’t agree to blindly approve the application. Some lenders are more lenient but they will still demand to know something about your finances.
- Unprofessionalism: Most financial institutions aren’t known for their warm interactions, but you can still sense when dealing with a shady lender. A professional loan lender for Canadians is one that is transparent with professional sales and services. High-pressure behavior or a primitive website full of misspelled words is a major red flag.
Identify Dangerous Loans
No matter the lender, some loans are dangerous for you. And it is easy to identify these loans online.
Expensive loans can leave you worse off than you originally were. Title loans are notorious for charging high fees that end up being almost a triple-digit interest rate.
Unlicensed Lenders are not supposed to lend in your province but they can offer loans from anywhere in the world online. Check with the government regulators if your preferred lender is authorized to transact where you reside. Trustworthy lenders don’t just “forget” to update their licenses. In essence, a dispute with an overseas lender will offer you little or no legal recourse.
Wise borrowing means taking out a loan you can afford to pay. Lenders are willing to loan you the largest amount you qualify for, but you don’t have to borrow the maximum. Even if the payments are affordable now, the future is unpredictable.
Getting a loan is a big financial step that shouldn’t be taken lightly. Knowing the details of the lender and how to best lookout for your safety is critical.