According to a source from Economic Times May 31, 2024, bank frauds rose nearly 300% in the last two years and digital frauds rose 708%. Have you noticed how home loan scams are increasing in India? They include misleading ads, wrong information, fake agents, builders, scam emails, and fake websites. When you apply for a home loan, you're investing your hard-earned money in one asset. If you're not aware of the scams around you, you could end up losing money. Let's learn more about these scams to protect ourselves.Home loan scams can happen during any part of the loan application process. Scammers might pretend to be bank employees, real estate agents, or even use fake financial companies. If you get caught in one of these scams, it can be really bad—causing you to lose money and messing up your credit for a long time.
Simple trick is before understanding any scams you first think: does this SMS, emails or phone calls logically sound good to you? For example: If anyone says that “We don’t need a credit or financial check, without checking the loan approval is done”? Do you think this logically sounds good to you? Absolutely not! So think in that way.
Scammers make fake loan offers that look amazing, like super-low interest rates, no fees to pay, or saying you're approved no matter your credit history.
You might receive emails, text messages, or phone calls out of the blue offering loans, even if you haven't applied for one. Sometimes Truecaller identifies these people as scammers but you need to take major precautions.
Fraudulent offers often promise guaranteed approval regardless of credit history or financial status, which legitimate lenders typically do not guarantee. Some spam emails or SMS you might be getting with like “Guarantee Loan Approval”. Check the messages.
Scammers may claim they don't need to check your credit score or financial background, which is not possible for a lender to give a loan without checking anything!
They may ask for upfront fees, such as processing fees, administrative charges, or insurance fees, before disbursing the loan amount. Real lenders typically take out fees from the loan amount or add them to what you pay back each month.
Scammers rush you to act fast, using urgent deadlines to push you into giving personal or financial info quickly.
Be cautious of emails or messages with bad grammar, spelling mistakes, or website links that look suspicious or generic.
Fraudsters might make websites that seem like real banks but have small differences in the web address or how they look.
If you can't confirm their address, phone number, or business registration, it might be a scam.
Identity theft is when someone steals your personal information, like your name, PAN card details, Aadhar number, or bank account information or credit card details, to commit fraud or other crimes in your name.
For example, someone might use your stolen credit card information to make purchases online without your knowledge.
How can I prevent this?
Be cautious of sharing personal information over the phone or online unless you are sure about the recipient's identity.
Title fraud happens when someone illegally changes the ownership of a property without the real owner knowing.
Example: A person forges papers to transfer a property they don't own to themselves, sells it to someone else, and keeps the money, leaving the real owner unaware.
Always conduct a thorough verification of property documents and ownership history before proceeding with the purchase
Some agents and brokers are fake. They pretend to be real estate agents or brokers, charge high fees for their services, and then vanish without helping at all.
Check credentials such as valid ID card, company they are from and also check government documents, business details such as registration, GSTIN number and other relevant information.
Loan phishing scams involve fraudsters posing as legitimate lenders or financial institutions to trick individuals into sharing personal information or paying fees under false pretenses. For instance, you might receive an email or message that looks like it's from a well-known Indian bank offering a very low-interest loan. The message asks you to click a link to apply for the loan. But when you click the link, it takes you to a fake website that looks just like the bank's real site. They'll ask you to enter your Aadhaar number, bank account details, and other personal information to "complete" the loan application. In reality, these scammers are trying to steal your personal information to commit fraud or steal money from your bank account. It's important to be cautious and always verify the authenticity of such offers before sharing any personal details online.
Misrepresentation of loan terms happens when a lender gives wrong information about a loan's conditions.
Example: A bank advertises a home loan with a low 6% interest rate. But when you read the details, you find out there are extra fees and charges that make the loan much more expensive than it seems at first.
An advance payment scam in home loans occurs when fraudsters ask for upfront fees or payments before processing or disbursing the loan, but they have no intention of providing any loan or service. Here's a simple example:
Example: A person claims to be a loan agent and contacts you, offering a low-interest home loan with favorable terms. They ask you to pay a processing fee upfront to initiate the loan application process. After you pay the fee, they disappear and stop responding to your calls or messages. You realize too late that there was never any loan, and you've lost the money you paid as the processing fee.
Sometimes builders make fake promises such as: You're interested in buying an apartment in a new project by a builder. The builder claims the project is approved by relevant authorities and promises timely completion with all amenities. However, during your site visit, you notice poor quality of construction materials, unskilled laborers, and deviations from the approved building plan.
When you ask for legal documents and project approvals, the builder provides vague responses or avoids your questions altogether. Upon researching online, you find complaints from other buyers about similar issues and delays in previous projects by the same builder. These signs suggest caution and prompt you to seek independent verification before proceeding with any financial commitments.
To avoid home loan scams, it's important to check if the lender is genuine. Pick a well-known bank or financial institution. Here are tips to verify a legitimate lender:
Check Credentials: Verify the lender’s registration with regulatory bodies such as the Reserve Bank of India (RBI) or the National Housing Bank (NHB).
Official Website: Always use the lender’s official website to gather information and initiate contact.
Customer Reviews: Look for customer reviews and feedback about the lender’s services online.
Keeping your personal information safe is crucial to avoid identity theft and phishing scams. Here are some important tips:
Secure Communication: Don't share personal info on public Wi-Fi or with unsolicited calls and emails.
Shred Documents: Shred papers with personal or financial info before throwing them away.
Strong Passwords: Create strong, unique passwords for your online banking and financial accounts.
Before buying a property and applying for a loan, thoroughly check to make sure everything about the property and loan terms is legitimate.
Property Verification: Verify the property’s title, ownership history, and any existing liens or encumbrances.
Legal Opinion: Seek a legal opinion on the property documents from a trusted lawyer.
Loan Terms: Read the loan agreement carefully, including the fine print, to understand the interest rate, tenure, EMI, and any additional charges.
4. Beware of Upfront Payments
Be careful with lenders or agents asking for upfront payments like processing fees or insurance. Here's what to watch out for:
Official Receipts: Always ask for official receipts for any payments made.
Payment Channels: Make payments through secure and traceable channels, such as bank transfers or cheques.
Go to your nearby branch from which money has been deducted. File a complaint in the crime branch.
| Aspect | Key Points |
|---|---|
| Verify the Lender | Choose reputable lenders, check credentials, and verify through official channels. |
| Protect Personal Information | Avoid sharing sensitive data over unsecured channels, use strong passwords. |
| Conduct Due Diligence | Verify property documents, seek legal opinions, read loan terms carefully. |
| Beware of Upfront Payments | Demand official receipts, use secure payment channels. |
| Monitor Credit Report | Regularly check for discrepancies, dispute unauthorized entries. |
| Repayment Tenure | Evaluate repayment capacity, consider prepayment options. |
| Interest Rate | Understand fixed vs floating rates, impact on EMIs. |
| Credit Score | Check and improve your score, maintain a good credit history. |
| Additional Charges | Look for transparent charges, negotiate fees. |
Applying for a home loan can be complicated, and knowing about frauds is important to protect your money. Understand the types of home loan scams, take steps to prevent them, and apply for loans safely. Check lenders' authenticity, keep personal info safe, research thoroughly, and know the loan terms. If an offer sounds too good, it's likely a scam. Stay alert and make smart choices to secure your dream home.
How can EazyBankLoan help you in taking a loan? We understand the process of procuring a loan can be stressful. That is why we take care of your Loan application process, saving you time and hassle by handling the paperwork and communication with the loan providers.
Check the details here at EazyBankLoan
Need help? Reach out at support@eazybankloan.com
Always check the lender's credentials, use their official website for information, and read customer reviews. Contact the lender directly through verified channels.
Immediately report the issue to the lender, file a complaint with the police, and monitor your credit report for any unauthorized activities.
Avoid sharing personal information over unsecured channels, use strong passwords, and shred documents containing sensitive information before disposal.
High fees without clear services, reluctance to provide credentials or references, and pressure to make quick decisions are common red flags.
Verify the documents with the local land registry, seek a legal opinion, and ensure there are no existing liens or disputes on the property.
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