Getting a loan is no longer perceived as something unusual. We use various credit products to solve our current problems, make major purchases, or reach our bold financial goals. Although sometimes a loan can be a great tool, it can also be a curse if you take it lightly. That is why it’s essential to ensure that you’re dealing with a legitimate loan company before you obtain debt.
Unfortunately, there are many scams and fraudulent loan companies that can take advantage of unsuspecting borrowers. At Ocean Spray Employees Federal Credit Union, we want to ensure that you are informed and protected. Below we explain the importance of dealing with a legal lender and provide a few tips on how to check whether a loan company is legitimate.
Why Is It Important to Deal with a Legitimate Lender?
Choosing a legitimate lender is critical to your financial well-being. Dealing with an illegitimate loan provider can lead to a host of financial problems and result in a spoiled credit history. Also, you can get into a cycle of debt and find yourself with no means to repay the loan but to get another one.
One of the most important reasons to deal with a legitimate lender is to protect your personal and financial information. Legitimate lenders always have strict privacy policies and security measures in place to protect your personal and financial information. On the contrary, illegitimate lenders usually don’t have the same level of security. More than that, some of them may try to steal your information for fraudulent purposes. Thus, by dealing with a legitimate lending company, you can have peace of mind knowing that your personal and financial information is safe and secure.
Another reason why it is important to pay attention to a lender’s legality is to avoid scams and fraud. Illegitimate lenders often use deceptive and misleading practices to grab borrowers’ attention and trick them into giving money or personal information. These scams can result in financial loss, identity theft, and other serious consequences.
Finally, dealing with a legitimate lender ensures fair and transparent lending practices. Legitimate lenders are required to follow strict regulations and guidelines. They will disclose all fees and charges upfront, and they will not engage in predatory lending practices to trap borrowers in a cycle of debt.
How to Make Sure a Lender Is Legal?
At Ocean Spray Employees FCU, we’ve created a list of tips that will help you check a lender’s legality.
Check for Licensing and Accreditation
The first thing you need to do is to make sure the company has the right to operate legally in your state. Every state has its licensing requirements for loan companies. Check with your state’s regulatory agency or the National Mortgage Licensing System (NMLS) to see if the company is licensed.
Look for Reviews and Complaints
One of the easiest ways to determine if a loan company is legitimate is to look for reviews and complaints from previous customers. Check various customer review websites, such as Yelp, Google, or Trustpilot, to see what previous customers think about their borrowing experience. Also, you can use the information from the Better Business Bureau (BBB) or Consumer Financial Protection Bureau (CFPB) to find out if there are any complaints against the company.
Review the Company’s Contact Information
A legitimate loan company typically has a physical address, phone number, and email address. Make sure that the contact information is legitimate by calling or emailing the company. If you can’t reach anyone or the phone number is disconnected, it may be a red flag.
Avoid Upfront Fees
Be wary of loan companies that require you to pay in advance. Try never to give the money before you get approved and receive the funds, even if a lender says it’s a refundable deposit. A legitimate loan company will deduct fees from the loan amount, so you won’t have to pay anything upfront.
Review the Company’s Website
A legitimate loan company will have a professional and user-friendly website that provides detailed information about their loan products, fees, and terms. The website should also have clear contact information, such as a phone number or email address, that you can use to get in touch with the lender if you have any questions or concerns.
Compare Rates and Terms
Compare loan rates and terms from different loan companies to ensure you’re getting a fair deal. Be cautious of loan companies that offer sky-high interest rates or unreasonable terms. Although some bad credit options can be more expensive than conventional ones, make sure they are still reasonable.
Getting a loan can be a great way to solve your problems or reach your financial goals. However, it’s important to be cautious and choose a legitimate loan company to avoid unpleasant surprises.
When choosing a lender to deal with, remember to always put your safety and financial future first. Try to do your research, ask a lender about a license, and make sure that previous borrowers have got a pleasant borrowing experience there. Keep in mind that upfront fees are usually a red flag that indicates a predatory lender. Also, don’t forget to check for a physical address and contact information and compare rates and terms to make sure you are offered a competitive product.
Your savings federally insured to
at least $250,000 and backed by
the full faith and credit of the
United States Government Agency
National Credit Union Administration,
a U.S. Government Agency
We do business in accordance with the
Federal Fair Housing Law and the
Equal Credit Opportunity Act.