It is factual that fintech has transformed the financial industry, making lending easier than before, and Ghana is no exception. However, that has also increased the number of fraudulent activities as far as lending is concerned. Day in and day out, people fall prey to these fraudsters because their victims are usually vulnerable when borrowing, depending on what they need the loan for. But while others genuinely don’t know how to identify scam loans, some victims see the red flags alright but choose to ignore them and not calculate the long-term effects of such decisions. Whatever the case, this article seeks to help you easily identify loan scams and avoid them. 

1. Unrealistic low interest rates

While it is financially wise to secure loans from companies that offer affordable interest rates, some firms offer unrealistic, low interest rates, and research has shown more often than not that such offers are scams. Remember, if it is too good to be true, chances are that it is a scam. Don’t be tempted to deal with such people because the end will be disastrous and humiliating. The best thing to do is compare their rates with legitimate banks or lending institutions. If it's far below market rates, don’t just be cautious; run for your dear life. It’s better to pay a much higher rate elsewhere than to gamble with your reputation.

2. Unrealistic approval time and pressure to act

One easy way fraudsters have their way is to offer not just quick but unrealistic approval times, knowing very well their victims usually want the funds there and now. Some go as far as saying disbursement is done in under 30 minutes. While a few firms can genuinely have such a short turnaround time, it is usually untrue. Other times, scammers create urgency, claiming limited-time offers or threatening to revoke the loan if you don’t act immediately. Please take your time to review the terms, research the lender, and seek advice from trusted sources before making a decision. 

3. Upfront fees and payment requests

Another red flag to watch out for is the financial commitment demanded before the loan is disbursed. While legitimate lenders don’t demand payment, i.e., processing fees, deposits, etc., before issuing a loan, scammers will always demand that as a requirement. Never make a mistake by paying fees in advance, especially if it’s online. Authentic lenders will usually deduct charges from the loan amount or after disbursement, depending on the borrower's choice.

4. No proper documentation or contract

Firms that seek to defraud their victims usually don’t have properly approved BoG-prescribed sample contracts. Because they intend to defraud you, they either don’t provide a contract at all or provide a scanty and nonsensical one. For instance, scammers may avoid offering a written contract or provide vague terms, relying instead on verbal agreements. Test their authenticity by insisting on a clear, written loan agreement. Peruse it thoroughly, and ensure all terms make sense and are transparent before consenting.

5. No physical location or BoG licensing

Often than not, unauthentic lenders don’t usually have a physical location, don’t belong to any regulatory body, and are not licensed by the Bank of Ghana (BoG). Their operations are often online or via mobile apps without a registered office or business license. Be sure to verify lenders with the Bank of Ghana's list of licensed financial institutions by visiting their website or visiting the lender’s physical office, if possible, before any commitment.

In conclusion, beware of fraudulent lenders and avoid them at all costs. Nonetheless, if you are currently looking for an authentic loan, we, are your best bet. Visit us at Lapaz, adjacent to Ecobank in Accra. Or call us on 0240061709 for assistance.

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