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Here are some pointers that should serve as red flags for you
For any salaried individual, a home loan is a life altering decision and takes a lot of preparation. But what happens when after having saved up your hard earned money, you realise that you have been duped by an impostor posing as a lender? It can be devastating to state the least! If you are considering a home loan, here are some cautionary tips that can help you avoid such frauds.
Unfortunately, there is no dearth of dishonesty in this world and there are fraudsters lurking everywhere who are inventing ingenious methods everyday to rob you of your hard earned money. The Internet has made it even worse as you get the 'oh so believable' messages in your inbox and WhatsApp that lead you to believe that you are on the brink of receiving a 'once in a lifetime' home loan deal.
The message is even replete with all the coordinates of the contact person who is more often than not a super salesman!
You even make a few calls to the number provided and are convinced even further that only for a 'small' upfront payment, you can enjoy a superior mortgage scheme with an easy repayment schedule. But no sooner than you have made the transfer of your funds, the person who had promised you the moon, does the disappearing act, and you are left high and dry with no home loan and a gaping hole in your pocket!
In a bid to 'save' a few bucks, you realise that you have been taken for a ride in the name of an attractive home loan offer. So that you don't step into such traps, here are some pointers that should serve as red flags for you, if you are in the pursuit of a home loan.
1. An unknown company with a flashy newspaper/Internet ad
A home loan or a mortgage is a fairly sophisticated product that authorised lenders are supposed to dole out. These lenders have a foolproof mechanism in place and will assess your credit worthiness by checking your CIBIL score and CIBIL report before it even approves your loan application.
Even when your application is approved, many checks and balances are in place to ensure that there are no loopholes in the lending process.
Sure, there is a lot of paperwork involved and some upfront processing fee, but a lender of repute is clear about such things and makes the time and effort to explain you every such clause.
Rest assured, this is for your protection. Therefore, if you come across an ad, that promises you scanty paperwork or speedy disbursal, it should serve as the first sign of caution, no matter how attractive the terms of the loan seem in the advertisement.
Here are some other obvious traps that you must stay away from.
2. A fee in advance
Any company who is asking and insisting for a fee in advance to approve your loan while prmising the moon, should set the alarm bells ringing in your mind about the same.
An authorised lender can only ask for a loan processing fee after your loan application has been approved.
3. Unwilling to answer tough questions
If any company representative is unwilling to explain the terms of the so called 'attractive loan' or squirms the moment you start asking tough questions, you should not waste a moment in guiding her/him to the door.
Any lender worth her/his salt, should have nothing to hide or be uncomfortable about when a prospective customer asks for details.
In fact, s/he should be willing to explain things to you as many times as you may want. If there is no sign of that happening, you obviously have a problem in hand.
4. Pressure tactics
Some sales people of such fraud companies are glib talkers, and may even use pressure tactics to get you to sign documents without giving you an adequate chance to go through the documents.
Do not succumb to any such pressure, and insist on reading all the documents carefully.
Chances are you will discover the fraudulent terms and conditions right away, when you start reading these documents!
5. Asking for personal or financial information online
In this hyperconnected world, it does not take much time, money or effort to create an authentic looking webapage that is in a pursuit to extract sensitive financial or personal information. Any webpage that claims to be 'approved' by the government or a reputed lender and is asking you for any such information should serve as a red alert to you. No authorised lender or even the Government has the right to ask for any such information online that may cause you any monetary loss.
Such fraudulent loan companies target salaried individuals who are prone to accessing a lot of credit and do not have a great CIBIL score to boast of in the first place. That is the reason, that such people walk willingly into the trap of such fraudsters. Do remember, that in order to get a home loan, you should work towards having a satisfactory CIBIL score. If you have a good credit history and your CIBIL score is well above 750, there is no dearth of reputed lenders who will vie for your attention and be more than willing to give you a home loan.
The author is a credit expert with 10 years of experience in personal finance and consumer banking industry and another 7 years in credit bureau sector. Rajiv was instrumental in setting up India's first credit bureau, Credit Information Bureau (India) Limited (CIBIL). He has also worked with Citibank, Canara Bank, HDFC Bank, IDBI Bank and Experian in various capacities.
Photograph: Kenneth Lu/Creative Commons
