Loan scams are on the rise in Canada, putting a large population at risk each year of having their hard-earned money stolen.
In fact, the Better Business Bureau of Canada confirms the news that Canadians across the country have lost millions of dollars to all types of financial scams over the past two years.
The scariest part?
Victims rarely recover their stolen money. This is a high price to pay for a simple, innocent mistake.
Canadians reliant on loans
Access to loans can be life-changing for many residents in Whistler. For some, loan approval can help pay the bills and put food in the fridge and cupboards – or not.
This is where private online loan vendors come in.
Private online vendors have improved the financial landscape for many because these web-based resources are more likely to help people experiencing financial issues or those with denied loan applications from mainstream branches access the funds they need.
However, the increase in online loan vendors has also resulted in a rise in the number of personal loan fraud cases. By recognizing the common signs of a loan scam, potential loan applicants can protect themselves from being defrauded.
How to tell if it’s a loan scam?
Asked to pay upfront
A recent Loans Canada survey showed that approximately 45 per cent of credit-constrained Canadians who consider themselves financially savvy believe that alternative or online lenders are within their rights to ask for payment upfront because it adds additional security.
This could be a very costly misunderstanding.
Licensed lenders do not ask for money upfront. Often shady lenders will request a processing or insurance fee as a condition for approval. Don’t fall for this. Being asked to transfer money via e-transfer, credit card, western union transfers as a method to secure a loan is a sign you’re being swindled.
Guaranteed approvals lure victims in
Guaranteed loan approvals don’t exist - nothing in life is guaranteed. A legitimate lender will want to first verify the applicant’s information and evaluate their creditworthiness before approvals are granted. Guaranteed approval is a way of manipulating applicants to collect upfront fees.
Read more on why guaranteed approvals are a scam here.
Too much pressure
Scammers like to put the pressure on loan applicants to get them to commit quickly. This leaves little time for people to realize they’re being scammed. Tight expiration dates are a red flag – be careful.
Do they even really exist?
Sadly, the survey conducted by Loans Canada also revealed that credit-constrained Canadians rarely call vendors to ask questions and do further research when taking out a loan.
If the lender has no presence in the real world, it’s likely that something might be awry. Do your research and double-check if they have an actual office with a legitimate address.
Knowledge is the best line of defence
Loans Canada recommends loan applicants take time to research lenders, look for verified sources for reviews and even discuss the loan application process with trusted friends or family members. These are all ways that Canadians can arm themselves with more information to prevent them from falling for a loan scam.
“Over the last few years we have seen an uptick in loan fraud,” says Loans Canada Chief Technology Officer, Cris Ravazzano. “Loan scammers are mimicking many online lenders and similar websites, luring Canadians into paying to qualify for fraudulent loans. We want to bring light to the issue to help inform and protect potential victims of this fraud.”
I think I’ve been scammed. What now?
Once you’ve been scammed, there is not much that can be done after the fact. However, if you’re suspicious that a lender might be trying to manipulate and scam you, contact your local police and the Canadian Anti-Fraud Centre.
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