With fraudsters and deceptive tactics continuously improving, it can be tricky to separate the legitimate loan companies from the scam artists. However, it’s an essential skill for protecting your personal information and avoiding costly traps like hidden fees.
These five steps will help you determine which companies you can trust with your business and which you should stay away from.
How to Find Legitimate Loan Companies
1. Verify The Company’s Legitimacy
One of the fastest ways to screen for untrustworthy loan companies is to check whether they’re licensed to operate in your state. Fortunately, you can verify licensing statuses through free websites like the following:
- Conference of State Bank Supervisors
- Department of Financial Regulation
- Attorney General’s Office in Your State
- Nationwide Multistate Licensing System
If you can’t find a prospective loan company on any trusted sites, consider it a red flag. Doing business with an unlicensed lender puts you at risk of fraud and limited legal protections.
2. Check for Clear Contact Information
Legitimate loan companies make it easy for you to reach them. Even if they operate exclusively online, they should clearly list contact details like a phone number, email address, and mailing or business address. Be wary of companies that only provide an online form or generic email with no other way to reach them.
3. Review Online Presence
A company’s online presence says a lot about them. At a bare minimum, make sure the loan company’s website is secure. If you’re doing financial transactions and sharing personal information, you want a site that is going to protect your data.
Look for a padlock symbol in the address bar when you type in the URL. See that the URL starts with an “https,” in which the “s” stands for “secure.” If you can’t find a lock and the “s” is missing, their site isn’t safe.
You can also review the contents of the website for additional insights. Untrustworthy companies are more likely to have shoddy or incomplete pages, while legitimate lenders typically put more care into their presence.
4. Read Loan Company Reviews
Reviews can tell you a lot about how a loan company treats its customers. Use sites like the Better Business Bureau (BBB), Trustpilot, or Google Reviews to see what other people have to say. Look for patterns, like repeated issues with customer service, fees, or communication.
Legitimate companies tend to have a mix of feedback but should show consistent signs of reliability and professionalism. Positive reviews that mention clear terms, fair treatment, and responsive support are good signs.
5. Read the Fine Print
Even after doing your due diligence on a potential lender, make sure to review the terms of every offer you receive before you sign any agreements. Here are some details to pay special attention to and compare to other providers:
- Total cost of the loan
- Annual percentage rate
- Loan repayment schedule
- Penalties for paying the loan off early
- Fees for late payments
If a lender makes it difficult for you to find this information or refuses to provide it, it’s probably best to avoid working with them. Transparency should be a given.
Final Thoughts
Finding a legitimate loan company takes a fair bit of research, but it’s well worth the effort to protect your finances and personal information. Take steps like verifying licenses, exploring online presences, and reading customer reviews to weed out the untrustworthy options.
Even after you’ve determined that a lender is worth doing business with, make sure you also examine your actual loan terms carefully before committing.
