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Choosing a Loan - How to Spot Unscrupulous Loan Websites and Advertisers
Author: David Lynes  | Posted: 19-12-2007 | Comments: 0 | Views: 11 | Rating: (52)  (?) 
Finding the right loan and the right loan company can be very difficult at times, and with so many lenders advertising and setting up websites choosing a loan product can be a real minefield for the consumer these days. At the same time, taking on any sort of loan is a serious and long term financial commitment, and in order to avoid being ripped off or ending up in hot water in terms of your finances it is vital that you find not only the right loan product but also the right lender. There are many lenders out there these days, but it is important to remember that some of these lenders may be unscrupulous and unfair in their lending practices, and the only person to suffer in cases such as these is the borrower.
No matter how glossy the advertisement or how colourful the website, it is important to know how to spot a less than savoury lender, as this could save you a fortune and a great deal of grief and stress in the future. There are a number of key things that you need to look out for in order to avoid the pitfalls of more unscrupulous lending practices. These include:
• Checking that the lender is regulated. You should check on the website or advert to make sure that the loan company is regulated by the Financial Services Authority. This provides vital protection for you as the consumer, and without this the loan company could be engaging in all sorts of unfair practices, which is something that you definitely want to avoid. The company should state on the website or advertisement that it is FSA regulated, and if it does not then you should avoid it.
• Quality of information. Although colourful websites and glossy advertise can be eye-catching, what really matters when it comes to taking out a loan is the quality of information that is provided. If the information on the advertise or website is very vague, focusing solely on trying to get you to take out a loan rather than providing information to help you to reach a decision with regards to taking out a loan you may wish to steer clear.
• Pushy sales techniques. Many consumers see a website or advertisement for a loan and then contact the company by phone. If you do this and find that the sales staff members are pushing you into taking out finance then you should probably stay away. This should be your decision, and you should not have sales people telling you that 'if you don’t take out the finance right there and then there is a chance that you may not get finance at all or you may have to pay a higher rate'.
• Modern day loan sharks. You should also look out for advertisements from modern day loan sharks. Again, setting up an eye catching website or glossy advertise can be simple, and can be very effective when pulling in unsuspecting customers. Avoid companies that target those with poor credit, collect repayments door to door, and charge extortionate interest rates, no matter how attractive they try and make the deal sound.
• Charging for processing your application. One thing that should ring alarm bells is where the advertisement of website offers faster processing or the guarantee of finding you a loan, no matter what your circumstances, in exchange for a fee. A number of loan companies charge around £50 or more simply to process a loan application, often with unfounded guarantees that they can find you the perfect loan whatever your credit status.
• Adding PPI or hard selling PPI: Payment protection insurance can be a valuable type of cover, but it is not compulsory and certainly does not have to be taken with the lender through which you are taking finance. The website should make it clear that the cover is optional, and you should check that you are not guided in to opting for it without your knowledge, when accepting a loan quotation.
• Advertised rates: Some websites and advertisements will put something along the lines of 'competitive low rates starting from…' when in fact what they should be doing is advising you what the typical APR is on their loans. The typical APR is the rate that 66% or more of applicants, will actually get.
In short, no matter what type of loan you are looking for, you should not be focussing on the attractiveness of the advertisement or website. Instead, you need to ensure that:
• The company is FSA regulated
• The information provided enables you to make an informed decision
• You are not talked into taking out a loan or making a decision by pushy sales staff
• You do not sign up to loans from doorstep lenders that charge extortionate interest rates and target low credit and low income households
• You do not pay for your loan application to be processed, or for a guarantee of getting a loan
• Don't be pushed into taking out payment protection cover from that particular lender
• Look out for websites that advertise 'rates from…' rather than a typical APR
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