When you are looking to take out a loan, the last thing that you want is to run into an irresponsible and uncertified loans provider and have your data in the wrong hands. In the loans business, there are so many different products on the market, and it is vital that you are able to recognize reputable lenders from untrustworthy ones.
One particular issue in the high cost short term loans space is being able to spot brokers over lenders. In the past, it would be hard to tell the difference between a lender who a broker that would pass your details over to several companies leading you to get tonnes of spam. Hence, you find individuals looking on Google for payday loans direct lenders far more than before.
All reputable loans companies should:
- Follow the regulation of the Financial Conduct Authority
- Have full authorisation, approved representative or interim permission with the FCA
- Have a Consumer Credit License
Trustworthy lenders will be able to prove that they have full authorisation from the Financial Conduct Authority (FCA). The FCA have a Consumer Credit Register which outlines which companies have full authorisation or ‘interim permission’ to offer loans and credit to consumers. Always be sure to check this register prior to filling in an application.
Check for a Company Address & Phone Number.
All legitimate loans companies should have a registered company address and phone number. Check that the address stated does in fact exist on a map database, and try calling their number. If they have ‘P.O box’ address rather than an actual address, consider finding a different lender.
When making a phone call to the company, only go ahead if you are put through to an actual person and you judge them to be reputable. A good lender will start with some security questions and read you some rights before divulging further information. Also make sure to check that the phone number given has the area code of the address given – you should not trust being put through to random countries or mobile numbers.
Consider Upfront Fees a Red Flag.
Asking upfront fees for loans (other than mortgages) is a very unnatural way to get a short term loan and should raise some eyebrows. There is no reason why you should have to make an upfront payment when applying for a loan, even if it is dubbed as a ‘security deposit’ or ‘subscription’ or something of the like.
If an upfront fee is demanded but you still feel the company is a reputable or moral lender, make sure to demand proof of FCA regulation before continuing with your application. In any case that this cannot be proven, look for another lender who can prove themselves to be trustworthy.
Think: ‘is this too good to be true?’
Some websites by lenders will use phrases like “100% Guaranteed” or “Always Approved” when actually the regulatory bodies require them to carry out quality credit and affordability checks. The only way that a website could justify this is if they pass on your details to so many companies that it gives you more options for financing but also several phone calls, emails and text messages to potentially follow.
Enlist the Help of a Lawyer.
Some false lenders can be pretty convincing with regards to their legitimacy. If you are worried that you might be scammed, but do not have the resources or the knowledge to find this out yourself, take your proposed loans agreement to a lawyer.
A lawyer who deals with financial contract disputes will be able to spot anything that may be wrong with an agreement, be the lender legitimate or not. It is far safer to invest in the advice of a professional when your livelihood is on the line than to take risks with shady-looking lenders.
Of course, this might not make sense for a £300 loan, when a lawyer’s fees will be a lot more. But certainly for huge sums or business loans that run in the tens of thousands.
Trust your Instinct.
Lastly, when deciding whether or not to sign an agreement with a loans company, always trust your instinct. If you are having overwhelming doubts about the legitimacy of a company, then it is possible that even if they are not fraudsters, they have given you a good reason not to work with them.
Remember that they are offering you a service, and the service needs to work for you. There are plenty of loans providers on the market, so do your research, and land on the one that seems right for you.
