There comes a time in most people’s lives where they need to take out a loan from somewhere. Be that to pay for a mortgage, a holiday, a wedding, a new bathroom, car or to fund university, there are so many reasons why we might need to top up our funds. But with so many options to choose from, it’s essential that you keep you and your money safe by choosing a legitimate and ethically responsible company. But do you know what a legitimate firm looks like? Here is a quick guide on how to avoid loan scammers:
They shouldn’t ask you for upfront ‘insurance’ fees
There are hundreds of cases of people applying for loans online and being asked to pay a fee, usually up to £450, to cover insurance. This fee is paid, with the promise that it will be refunded, but not only is it not refunded, but the credit is never received. This is known as loan fraud – the fraud takes place as soon as you pay the money. This scam can be avoided if you stay vigilant against the following: if you get a call or text out of the blue after researching loans online, or if you are asked to transfer money to a bank account upfront or by a strange method, for example, by Western Union, you are put under pressure to pay quickly and are told, after the first payment, that more money is needed before you can have the loan. If any of these techniques are ringing a bell with you, and you think you might have been scammed, you can report the scam via the Financial Conduct Authority’s website.
It is worth noting that if you are asked to pay a fee by a legitimate company, you will be given a notice in advance that will include the legal name of the firm and a declaration that they are acting as a credit broker. The fees should be asked for as payment for services and how and when those fees are calculated must be made transparent. You will have to acknowledge the notice and its contents.
They should be registered with a regulating body
To ensure that you are dealing with a legitimate firm who will handle your money safely, you should check that the company is registered by a regulating body and, therefore, has a code of conduct and is being held to account for the way they practise their work. Car Cash Point is one of the UK’s leading logbook loan companies, who offer clients a low rate of interest combined with flexible and transparent loans, using your vehicle as security for the money. They are a fully registered member of the Consumer Credit Trade Association and are fully committed to ethical and responsible lending, so you can borrow money from them with peace of mind. The Consumer Credit Trade Association offer legal advice, training and fully compliant credit agreements to companies who offer credit to consumers. They have strict codes of conduct that regulate how these businesses work.
Their contact details should be easy to find
If you have been contacted by someone wanting to give you a loan, you are replying to an advert or you have found a website that doesn’t have a physical address for the company, think twice before using them for a loan. A scammer will make it as difficult as possible for you to get in touch with them once they have your personal information or your money so will not give you their contact details. Steer clear of anyone who is not fully transparent about where they are doing business from. They may only offer you a PO box, a mobile phone number or a premium rate phone number (these, especially, are a red flag – they could be trying squeeze every last drop out of you), instead of an address or UK landline and you won’t be able to get in touch with them as soon as things start to go wrong. In fact, it is really important not to share any of your personal details with anyone who cannot validate who they are. Legitimate companies will clearly display contact details on their websites and in email signatures: for example, Car Cash Point has them displayed at the bottom of the page as well as having a Contact Us page.
All communications should be spelt correctly
Real businesses understand the importance of coming across well to the public – well communicated messages will appear trustworthy, reliable and knowledgeable. That means that all letters, texts and emails will be spelt correctly with a good use of grammar. If you get any communication about a loan that is badly spelt with poor grammar, this is probably an indication of a fraudulent business so be wary of responding.
If you are advised to keep it quiet, ask yourself why
Taking out a loan is a big decision and you are very likely to want to talk it through with friends and family or even a financial advisor. If you are asked to keep the transaction quiet, then this should immediately alert you to a scam. You are probably being asked not to discuss the loan because they don’t want you to be swayed away from giving them your money.
If any of the information above sounds like something you have been affected by, or you’d like to find out more about fraud and scams, Which? has a consumer rights branch that has a great series of guides to help you spot and report scams as well as advice on how to get your money back if you have been a victim.
Here are 10 tips to help you make the best choice, when you’re looking at logbook loans compared to paydays loans.
Personal choice and circumstance are two big factors in deciding which loan will suit you best. But by looking at the pros and cons, you’ll be able to make a choice that works for you and your finances. And you might be surprised at the results!
1). Look at the bigger picture
When you need cash quickly, it’s easy to get carried away and sign up to something that might not be the best deal for you. But it pays to take a bit of time to make yourself aware of the facts of the loan and the lender, before you sign the dotted line. In a nutshell, take a look at the bigger picture including how much the loan will cost you overall.
2). Check the interest rate
A logbook loan means you’ll pay the loan back over a longer period. This generates a much lower APR interest rate for you to deal with which means lower payments. A high interest payday loan is designed to be paid back quickly, and in full, on your next payday, resulting in a much higher payment.
3). Check the repayment length
Payday loans are designed to be paid back in full when you next get paid. But it could take longer to pay it off all in one go if you have any unexpected additional expenses during the month. Logbook loan repayments, though longer, will give you more structure, so you know exactly how long you’ll be paying back your loan.
4). Check your payments
As you know by now, taking a payday loan means you should be able to pay the debt off all in one go after a month. Logbook loans offer different payment levels to go with your repayment length, to help you budget better according to how frequently you get paid. That way, you know exactly how much you’re paying every time.
5). Check the T&Cs
Many payday loan companies try to bury the bad news deep within their small print. Always make sure you know the facts of your loan before you sign so there are no nasty surprises you haven’t been made aware of. Ethical logbook loan lenders like Car Cash Point will always make you aware of any fees or charges you might incur.
6). Can you make over payments?
A Car Cash Point logbook loan doesn’t need to be as precise as when it’s agreed. Should you find yourself with a bit extra in your paypacket, you can make over payments to help you reduce the loan as well as the interest. Payday loans don’t offer overpayments, so the loan will last as long as it takes to pay back.
7). Can you pay off your loan early?
Once you sign up to a payday loan, they’ll attempt to recover the payment and the interest directly from your bank account when you get paid. With a Car Cash Point logbook loan, even though it’s agreed for a longer period, you’re welcome to pay your loan off at anytime when you have the funds to do so.
8). Any hidden charges?
Many payday loan lenders like to hide their fees and charges, so you could get stung for excessive extras if you can’t make a payment. With a Car Cash Point logbook loan, you’re always made aware of any fees and charges that you could face at the time of application. So you know just how much you’ll add to your loan amount if something unexpected happens.
9). Are you creditworthy?
Most payday loan lenders rely on credit checks to make sure you’re able to pay your loan back. That just makes it hard to get a payday loan in the first place. At Car Cash Point, there are no credit checks required. So if you’ve had credit problems in the past, you should still be able to get the loan you need.
10). Choose a logbook loan lender who cares
Looking through this list of logbook loans compared to payday loans, it highlights the differences between the high-risk/short-term, and the low-risk/long-term options available to you. If money is tight, you probably won’t want the the high-risk payday loan.
Opting for a low-cost logbook loan from a trusted lender like Car Cash Point, can give you much more freedom and flexibility in the long run.