5 Signs of a Shady Online Lender – What to KnowSeptember 11, 2019
Nowadays, you can do many things on the internet – order pizza, listen to lectures, pay bills, and communicate with loved ones on the other side of South Africa. However, when applying for loans online can be dangerous. Not only will your money be at stake, but your personal information as well. Because of this, you need to exercise great caution when looking for a reputable lender online. Fake lenders, scammers, and profiteers proliferate online, and here are the signs you need to look out for:
Exorbitant interest and charges
If the lender charges interest payments that are higher than the principal amount you borrowed, you better think twice about choosing that lender. You might only end up wallowing in perpetual debt. A reputable lender follows only the lending interest rates set by the South African Reserve Bank. You should also be wary of high “service charges” or “advance fees” that do not detail the reasons for payment.
High interest rates, high service charges, and lack of transparency behind these charges would mean that your lender treats you and every customer they have as a mere cash cow. Opaque, advance fees, on the other hand, is a scam red flag. A legitimate lender would not ask you to pay advance fees that are not explained clearly and adequately in your loan agreement. Lenders of larger loans, such as mortgage financers, may ask for advance fees, but the reasons for these charges would be written on paper.
Lack of information about the lender
Lending scams involve setting up a website that asks you to provide sensitive information at once, such as credit card number, social security number, home addresses, and date of birth. If the lender has no physical office address, contact number, and list of company officers indicated in their website, the ‘lender’ is most likely a scammer trying to steal your money and personal data. More than losing cash on false service charges, you can become a victim of what is known as ‘identity theft.’
Make sure to call the lender using the contact information they provided on their website. Double-check their website information further by searching for their physical office on Google Maps. If they do not respond or have no office address, you are likely dealing with a scam.
Not registered with the NCR
The National Credit Regulator (NCR) serves as the regulator of micro-financing and lending institutions, offline and online, based in South Africa. Under the National Credit Act of 2005, all businesses involved in lending must be registered with and licensed by, the NCR. If you have a complaint against an NCR-licenced lender, you can hold them accountable with the National Credit Tribunal. Without such registration, not only is the lender operating illegally, but you are likely to lose your data and money to an entity with no way of catching them.
Inadequate data privacy protection
Under South Africa’s Protection of Personal Information (POPI) Act, businesses, such as lenders, are required to utilize mechanisms to prevent theft and unauthorized use of their customers’ data. Note that even some real-deal lenders have shortcomings when it comes to POPI Act compliance, making you at risk of losing your data. Select a lender who has a secure data gathering and transmittal system that only you and your lender can securely access.
Keywords too good to be true: “Guaranteed approval” and “zero interest”
Lenders are not in the business to lose money, which is why they cannot lend the money to just anyone. If a lender thinks that you are unable to pay back your loans on time, they will reject your application. When a lender claims that your application is guaranteed to be approved or that you would be charged for zero interest, it might be too good to be true. In such a case, they could actually be going after your data.
With the tips given, you will be able to filter out alarming lenders online to keep your data safe from possible hackers and scammers.
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