Need a loan? Here’s what not to do

Shopping for a loan online is about as risky as looking for love online — the chances of you ending up poorer are very high indeed‚ because the internet is the perfect hunting ground for fraudsters. Here are the red flags:

* If a company claims: “Blacklisted welcome” or “no credit checks done” know that they are operating illegally.

 To be legal‚ a credit provider must be registered with the National Credit Regulator. If they are not‚ at best you will be charged outrageous interest‚ and at worst‚ fall prey to the upfront fee scam. See below.

* If you get an email about a easy‚ low interest personal loan‚ it’s probably a scam.

The fraudsters often use the name of a legitimate bank or loans company in order to dupe loan seekers. Look for their National Credit Regulator registration (NCRCP) number in that email. And if you find one‚ don’t stop there — go to the Regulator’s website (‚ click on Credit Providers and search for their name. It must be the same number. And even if it is‚ call the phone number in the NCR listing to check whether the email is legitimate.

* If you’re after a loan and you are asked for an upfront fee first‚ disengage‚ fast!

Usually the fraudsters offer an interest rate way below the market average as bait‚ then approve your loan application before asking you for a fee — an attorney’s or “admin” fee. Pay that and you’ll be asked to pay another‚ and another‚ and you’ll never get that loan. The money will flow in one direction only — from you to the fraudster pretending to provide loans.

Legitimate loan providers never ask you to pay such upfront fees.

The National Credit Act allows credit providers to charge a so-called initiation fee. It can be built into the credit agreement‚ in which case you pay interest on it‚ or you can choose to pay it upfront.

But don’t confuse that legal initiation fee with a demand for payment of an arbitrary fee when you apply for a loan‚ and in the absence of a credit agreement.

* Be especially wary of loan companies with names that sound like “looking for a loan”‚ such as “Loan Scout” and “Loan Locator”.

You think you’re applying for a loan‚ but what you’re actually doing‚ if you submit that “application”‚ is subscribing to a telephonic advice service‚ for which you will be charged a monthly fee. And if you don’t pay‚ you’ll get threatening letters.

- Wendy Knowler helps Times Media’s readers with consumer queries and complaints. You can contact her on email: or via Twitter: @wendyknowler