Loan scams are becoming more and more common, and are becoming smart enough that they’re able to catch out even the most careful people. With tempting offers that promise quick cash or guaranteed approval, it’s easy to fall into the trap, especially if you're feeling stressed about money.
Scammers are also skilled at making their offers look real, using fake websites, official-looking emails, and even posing as official company representatives. Another very common tactic is using fake social media accounts to promote their lending services in comment sections.
While most people aren’t likely to fall for some of these predatory practices, those who are in urgent need of money might just take the bait. However, taking a wrong step could cost you more than just a few pounds.
At Salad, we’re an FCA-regulated direct lender, specialising in loans for employed people who have been wronged by the traditional credit score system. We don’t guarantee loan approval, and we use a unique Open Banking system to assess the loan affordability of our borrowers.
In this blog, we’ll discuss the red flags of loan scams, so you know what to look out for before you hand over your personal details. If you're applying online, being aware of the warning signs can help you stay safe and protect your hard-earned money.
Let’s talk about how to spot a loan scam before it catches you off guard.
Steps to Take If You Suspect a Scam
If you think you’ve come across a loan scam, you should stop all contact with the lender right away. Make sure you don’t share any personal or bank details, and report the scam to local authorities or cybercrime websites to help protect others.
If you’ve already given your money or information, contact your bank immediately - they might be able to stop a payment or secure your account. You should also keep records of all messages, emails, or documents as proof.
It’s normal to feel stressed, but if you act quickly, you may be able to limit the damage. Speaking up about a loan scam will help others stay safe, too.
Understanding the Warning Signs of a Loan Scam
If you’re looking to borrow money, how do you know if a loan is a scam? The first step is to learn and look for the tell-tale signs.
For instance, if a lender promises guaranteed approval, it’s a red flag. Real lenders will either check your credit history first, or they’ll use other FCA-regulated methods to determine your ability to repay the loan. No considerate lender can guarantee your approval for a loan.
You’ll also need to watch out for signs such as being pressured to act fast or pay upfront fees before you get the loan - this is a common scam tactic. Additionally, you should be careful if the lender has no registered company behind it, no physical address, is not FCA regulated or only wants to communicate by email or text.
Trust your gut - if something feels off, it probably is. Understanding these signs can help you avoid a loan scam before the scammers have the chance to access your money.
Recognising Legitimate Lending Practices
Legitimate lenders follow clear rules and don’t rush you into making decisions. They’ll lay out the loan terms, interest rates, and repayment plans in detail before asking you to sign anything. Additionally, they’ll never ask for money up front just to “process” the loan.
Real lenders have registered business addresses, customer service numbers, and FCA-authorised licenses to operate in the UK, especially if you're borrowing online. They’ll check your credit score or use an Open Banking system, like we do, to verify your creditworthiness before approving your loan.
If a lender skips these steps or avoids giving you clear answers, it’s a sign that something isn’t right. It’s always best to double-check before agreeing to any terms.
Communication and Transparency Issues
If a lender avoids your questions, gives vague answers, or refuses to share important details like fees and repayment terms, that’s a big warning sign.
Predatory lenders often use confusing language or avoid giving written proof of the loan offer. They’ll also only use email or messaging apps, and may ask you not to call them.
On the other hand, a trustworthy lender will be open about the process and happy to explain everything. Honest lenders should be easy to contact and have clear loan terms.
That’s why, when you’re in the process of applying for a loan, if the communication feels rushed, unclear, or secretive, it’s best to walk away and look for a more reliable option.
Checking Reviews and Previous Scams
Before taking a loan, you’ll need to check reviews and do a quick online search about the lender. Try to look for real customer experiences on trusted websites. If there are lots of reviews talking about being scammed or facing hidden charges, it’s a clear warning.
You can also search the company’s name with words like “scam” or “complaint” to see if anything suspicious comes up. Also, pay attention to lenders that have no online presence or have too many positive reviews that look too good to be true.
A genuine lender will have a track record and feedback you can trust. If you take some time to research, it can save you from falling prey to loan scams.
For Fair and Responsible Lending Services, Choose Salad
Hopefully, this piece has helped give you peace of mind regarding your chosen lender. If you’re looking to apply for a loan online from a trusted lender, Salad may be able to help.
At Salad, we recognise that life can be unpredictable, and sometimes you might find yourself in need of some financial support. As a leading UK direct lender, we offer fair and affordable personal loans, regardless of your credit score.
Using Open Banking technology, we analyse your current financial situation and spending habits to gauge your loan affordability. As an FCA-regulated and authorised organisation, you can trust us to keep your financial data safe.
Check your eligibility for a Salad personal loan now, and for more blogs like this one, visit our insights page.
