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How do you Avoid Predatory Lenders or Risky Lending Practices?

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Image Source : https://pixabay.com/photos/scam-hacker-security-virus-fraud-4126798/

Today there are a number of predatory lenders who can provide you a loan on extremely high interest rates. Learn how to avoid falling for such practices.

Avoiding scams and risky lending practices is crucial to protect your hard-earned money and financial well-being. As a young professional in India, here are some simple ways to stay safe from scams:

Research and Verify

Before engaging with any financial institution or lender, do thorough research. Check if they are registered and authorized by recognized regulatory bodies like the Reserve Bank of India (RBI). Verify their credentials and read reviews from other customers.

Beware of Unrealistic Promises

If an offer sounds too good to be true, it probably is. Be cautious of lenders or investment schemes promising incredibly high returns with little to no risk. Scammers often use such enticing offers to lure people into their traps.

Guard Personal Information

Never share sensitive personal information, like your bank account details, Aadhar number, or passwords, with unknown individuals or institutions. Legitimate lenders will never ask for such information through unsolicited calls or emails.

Watch Out for Impersonators

Scammers may pretend to be representatives of banks or government agencies. Always verify the identity of the person you are communicating with before sharing any information or making transactions.

Check Website Security

If you are dealing with an online lender or financial institution, make sure their website has proper security measures like HTTPS. If the address bar has a padlock icon means the website is safe. Secure websites protect your data from being stolen.

Avoid Upfront Fees

Be wary of lenders who ask for upfront fees or processing charges before giving you a loan. Legitimate lenders deduct these charges from the loan amount rather than asking for payment upfront.

Read and Understand Terms

Before signing any loan or investment agreement, carefully read and understand all the terms and conditions. Ask questions if something is unclear.

Avoid Peer-to-Peer Lending Risks

Peer-to-peer lending platforms can be risky. Only use reputable and well-established platforms, and diversify your investments across multiple borrowers to reduce risk.