How to Check If a Loan Company Is Legitimate: Full Guide

Eric Tyson

15.04.2024

There are many reasons you might want to borrow money. From business expansion to a personal emergency, you should always verify the legitimacy of a lender. There are many loan scams on the internet that pose as legit lenders, and their aim is to steal your data or money. Understanding how to check if a loan company is legitimate will save you from the risk of identity theft, and you will also be sure you’re dealing with a company registered to provide the services in your state.

When you choose the right personal loan direct lenders, you also get fair rates, so you will not be stuck in debt because of high fees. Before you apply for payday loans online, there are several ways you can confirm if a company is legitimate. Search information about the company on the local Better Business Bureau website. Also, an online search could help you find customer reviews. Always check to ensure if the company is registered with the right state government agency.

How to Check If a Loan Company Is Legitimate

To get started borrowing online, you must know how to find out if a company is legitimate. This will help you avoid personal loans scam that could leave you in massive debt and expose your personal data to fraud. Here are solutions you could pursue to know if a loan company is legitimate.

1. Review Addresses and Contact Details

Legitimate loan companies don’t conceal information about their address and contact. If the company does not provide transparent information about where they are located or how to contact them, you should suspect they’re trying to scam you. Look for information like the company email. If the email is on a generic mail agent Hotmail or Gmail, it’s a red flag. An address from a legitimate institution should be spelled correctly, so if any of these conditions are not met, you’re likely about to transact with a loan scammer.

2. Check State Regulatory Agencies

Another solution on how to tell if a loan company is legit is checking the state regulatory agencies it’s registered under. You should consult the state’s attorney general office to see if the company is licensed to provide services in your state. Lenders are required to register with state agencies to do business in the state, so if there’s no record of the company in any state agency, you are likely dealing with a loan scammer.

Only apply no credit check personal loans with a company that’s licensed to provide services in your state. Licensing ensures the company operates within the confines of the law, so they must protect your data and follow fair lending practices.

3. Confirm from Better Business Bureau

Despite having an online presence, a loan company could still be a scam. Some of them will offer predatory services, which lock you in a cycle of debt through expensive interest. Go to Better Business Bureau to search for the lender to know about their reputation. This will tell you if they’re the right company to borrow from. You’ll find a rating from A+ to F and reasons for the grade. You could also read customer reviews, which reveal what you should expect. If the lender is not a good fit, use BBB to search for a better one.

4. Check Online Reviews

Online reviews reveal the overall sentiment of past customers. It’s a good indicator of whether the company is trustworthy or a scam. You can get information about their rates, efficiency, customer service, and any other thing you want to know. Read the reviews on independent platforms like Trustpilot as using the company’s social media pages could be deceiving because some companies delete comments that reveal their failures.

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Signs of Loan Scams

There are few signs you can spot that will tell you a company is a scam:

• Guaranteed Money – When a lender says they will lend you without reviewing your credit record, you should be careful. A reputable company must conduct a credit check or use another method to protect itself against risky borrowers. If the company sounds like they can approve your request easily, they’re likely looking to take advantage of you.
• Request for Immediate Payment – Some companies will ask for upfront fees as a part of the loan application process. Never borrow from such lenders as you’re likely dealing with a scammer. Of course, when you borrow, you must make regular payments, but that should never happen before receiving the money. Scammers often ask borrowers for money upfront and will also collect your personal information. Also, a legitimate company will never ask you to send money to a personal address.
• Aggressive Sales Pitch – A company using a high-pressure sales technique, such as forcing you to decide quickly, is a sign they want to scam you. Ensure you choose a company after you take enough time to review their products and policies. If you don’t feel comfortable with the way the company handles applications, consider looking for an alternative.
• Multiple Consumer Complaints – Another way you can check a company’s background is by searching on Better Business Bureau for complaints linked with the business. Also, use the BBB Scam Tracker to know if there are reports about the company.

What You Should Do After a Personal Loans Scam

If you fall in the hands of scammers, consider these steps to address your problem.

• Report to the police sheriff’s department. While you may not get the money back, this helps the authorities track down scammers.
• Backtrack if you share personal information with the scammers. Call your credit card issuer to inform them of the issue.
• Contact credit bureaus and put fraud alerts to make it harder for the scammers to get new credit using your name.
• Also, share a complaint with the FBI’s Internet Crime Complaint Center.

Conclusion

Before you borrow cash online, check that you’re dealing with a legitimate company. Review their contact and location information. Also, search the company on platforms like Better Business Bureau to see what other people say about them.

References

1. https://www.justice.gov/criminal-fraud/identity-theft/identity-theft-and-identity-fraud
2. https://www.businessinsider.com/personal-finance/how-to-avoid-loan-scams