How to Check if a Loan Company Is Legitimate

For a while now, online loan scams have become more frequent to the point where one can’t really tell which loan companies to trust.

If you happen to be one of those people who need to get a loan instantly, you might fail to see some of the red flags for an illegitimate business; hence, your chances of falling victim to scams will be severely high.

If you’re wondering how to check if a loan company is legitimate; don’t worry, it’s a quick process and will certainly come in handy if you need to borrow from loan companies in Australia like teleloans. Here are some of the methods that could help you. 

1. How to Check if a Loan Company Is Legitimate via Licences

how to check if a loan company is legitimate via licences

Ideally, every company acquires a set of registrations or licences, mainly due to how critical they are to maintain legitimacy. In addition to that, licensing systems help companies establish industry standards, and consequently, increase consumer trust.

Loan companies aren’t exempt from that rule. So, if you want to check whether or not a specific loan company is trustworthy, you can ask them about the types of licences or permits they have or check their website for information.

Alternatively, the quickest and easiest method is to check the Australian Securities and Commission (ASIC) website, and here’s what to look for:

AFS Licence

ASIC Connect has a record of every legal company and business that offers investments; therefore, every registered company on its website holds an Australian Financial Services (AFS) licence.

By checking the Professional Registers on ASIC Connect, you’ll be able to tell whether or not a loan company has an AFS licence. Under the “organisation and business names search” tab, check to see if a company’s scheme is registered.

All schemes must have a searchable Australian Registered Scheme Number (ARSN), which means that they adhere to the laws under the Corporations Act. Otherwise, the company you’re dealing with might be operating on an illegal basis.

ASIC’s Listings for Unlicensed Companies

Another good way you can go about this is to check the lists of unlicensed companies on the ASIC website. The banned and disqualified register on the ASIC should also provide information on companies prohibited from giving financial advice.

2. Check for Registration

check for registration of loan company

Registrations are generally not as good as licences when it comes to guaranteeing a company’s trustworthiness.

However, since this is the first step that most companies providing financial services take, it’s an excellent way to check for a company’s legitimacy because a good portion of illegal companies and businesses don’t have correct registrations.

Company Registration

Companies must be registered so they can operate legally. As we mentioned earlier, you can check for these registrations under the “Organisations and Business Names” register on the ASIC website for free. You might also find registrations for incorporated associations on the website.

Business Registration

Likewise, partnerships, sole traders, and similar must be registered in all territories in which they operate. Thus, make sure to check the “Organisations and Business Names” or look up the registrations on the ABN Lookup website.

3. Go to the Better Business Bureau Website

better business bureau website loan

Loan companies, legitimate or otherwise, can have an online presence. However, that doesn’t mean that you should trust a loan business just because they have a website.

The Better Business Bureau, a non-profit organisation, has a pretty useful website on which you can see reviews on different lenders. Lenders are graded from A+ to F, and you’ll also find users’ reasonings for giving a certain grade.

In addition to knowing whether or not a particular company is legitimate, you’ll also be able to review the pros and cons of dealing with various lenders, which will help you look for the best loan company for you.

4. Know a Fake Loan Offer When You See One

Aside from checking for registrations and licences on governmental websites, some signs can be a dead giveaway that a company or financial service is illegitimate. So, beware of these red flags before applying.

No Application Process

Typically, all licenced and registered loan companies require that you go through an application process, which can take a long or short amount of time depending on the type of loan and your credit score and finances.

Applications are integral for loan companies, helping them determine whether or not an applicant is qualified for a loan like wallet wizard.

If a company doesn’t show interest in your credit score or evaluates your financial circumstances, there’s a high chance that you’re dealing with scammers.

Generic Email Address

Loan companies typically communicate with their clients via business email address. Thus, if their email seems too ordinary to be considered ‘official’, you should probably refrain from applying for a loan.

Incredibly Low Interest Rate

check if a loan company is legitimate

The interest rate applied to a loan depends on a number of factors, such as the type of the direct money loans like cigno and your credit score. Illegitimate companies won’t have an eye for such details, and they’ll offer low interest rates to all their applicants, irrespective of their credit scores.

So, if a loan company’s interest rate seems too good to be true (even for the best loans that typically have low interest rates), don’t proceed further with your application.

What to Do Next

If you’re at least 80% sure that you’re dealing with an illegitimate loan company, the best course of action would be to curb all communication and transactions. Here’s how you can do so.

Avoid Replying to Emails

Illegal loan companies will have no qualms about sending you several emails a day in hopes that you’ll give them your financial information willingly. Thus, you shouldn’t respond to any of their calls or emails.

Don’t Make Any Payments

Under no circumstances should you provide them with any of your credit card information.

If you accidentally do so, don’t panic. Banks have pretty tight security over your interests, but to stay on the safe side, make sure to report the incident to the bank and ask them to cancel your credit card.

Report to the ASIC

Scams are pretty common, so if you’ve managed to avoid one, you can help others avoid it too by reporting the scam to the ASIC.

After that, the ASIC might add the company name to their registers and help others avoid them.

File a Police Report

know a fake loan offer when you see one

If possible, go to the nearest police station and file a report. Police officers will then know the necessary steps to put an end to that illegal business.

Final Thoughts

Knowing exactly how to check if a direct money loans like nimble is legitimate is relatively easy once you take the right measures. So, before you make any decisions, make sure to investigate your loan company of choice thoroughly!

About the Author

Lucy has over a decade of experience in finance. She is currently the content curator here at Perfect Payday.

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