How to identify loan scams? 6 Warning signs of loan scam

18 Sep 2021
How to identify loan scams? 6 Warning signs of loan scam
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There has been a lot of media coverage about loan scammers going on lately, especially during this COVID-19 pandemic. Usually loan scammers have these few tricks under their sleeve. I’m sure most of you must have heard of scammers asking for an upfront payment or processing fee, 0% interest rate and 100% guaranteed loan approval. Its crazy how it sounds very unrealistic but yet these scammers have their way of persuading victims to fall into their trap


To protect the public from falling prey to these unscrupulous organisations, we decided to do our part in raising public awareness.


1. Pay an upfront fee before loan application
If you are ever asked to pay an upfront fee (or deposit) in order to be able to proceed to get a loan, then it is most probably a scammer trying to make off with your money. No legitimate lender will EVER ask you to pay anything before you receive the loan. In fact, it is actually illegal for them to do so.

Similarly, if you are using a loan agent or consultant to apply for a personal loan, you do not need to pay them for any fee.  They shall receive their income as a commission from the bank or koperasi once the loan is approved.

Most scammers will try to justify the upfront payment as mandatory processing fees, advance repayment, insurance or even collateral. But these fees, even if required, will always be deducted from your loan amount before disbursement instead of being paid by you directly.

2. Asked to provide an ATM card or debit card

You are asked to provide your ATM or debit card as part of the loan application submission. This is most likely a loan scam as the scammer will ask you for money once the loan is approved and credited into your bank account.

They will use the ATM or debit card to either withdraw the money or ask you to give them a processing fee before they return your ATM or debit card. Any processing fees should be deducted directly from your loan amount before crediting the loan amount into your account.

3. Did not apply for a personal loan or amount borrowed is more than what you applied for

You receive a call or email saying that you are qualified for a loan with low interest rates. Sometimes you are even told that the loan is specially for you. But you did not even apply for any personal loans recently.


Or maybe you applied for one, but you are offered an amount that is more than what you have applied for. Beware of these unsolicited credit offers, and check if they are the real thing before proceeding.

4. Offers or loan schemes that are too-good-to-be-true

What does it mean by offers or loan schemes that are too good to be true? Unrealistic offers like guaranteed approval rate or interest rate that are too low. For instance, if you are told that the loan you are getting has ‘0% interest rate’ or ‘guaranteed cash or 100% approval’, block and delete that scammer right away.

Remember, a legitimate lender will check if you are capable to pay back your loan. Every lender cares about getting their money back. Legitimate lenders would measure your creditworthiness based on the following factors before approving your personal loan.

  1. Income & employment history

  2. Existing commitments

  3. Age & loan tenure

  4. Savings & assets

  5. Credit history (CCRIS & CTOS report, any blacklist/listed under ‘Special Attention Account’ (SAA) or ‘Agensi Kaunseling dan Pengurusan Kredit (AKPK)

5. Forced to make quick decisions

If a lender or a loan agent keeps pushing you to make a decision immediately, because their ‘low-interest, one-time offer’ is ending soon, then take it slow. That is because the scammers want to seal the deal with you fast and move on to their next victim. Never be pressured into making any decision, and only proceed when you are 100% sure who you are dealing with.

6.  Suspicious request for personal information

Sometimes, the scammer is not after your money, but to steal your identity for fraudulent purposes. They will impersonate a bank representative or loan company through phone calls, emails or even social media to trick you into giving them your personal information. This is called phishing.

Never give out copies of your I.C., driver’s license or bank account information unless you know who and what it is for. These scammers can even post advertisements using the name of legitimate companies, but these actual companies themselves are unaware of such impostors.

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