How to Check if the Loan Company is Legitimate

legitimate loan companyFinding a legitimate loan company is not an easy task. Before undertaking a loan, it’s essential to gather all the details about the legitimacy of the company. The last thing in the world you want to deal with is shady and suspect financial woes as a result of a less than stellar loan company.


Legitimate vs. Illegitimate

It is beneficial to know that there are many short-term loan companies that can help you get back on your feet again. But there is a downside to this: there are far more illegitimate loan companies than legitimate ones. When conducting your research, there are many details you can look for to prove whether a loan company is what they say they are.

On the other hand, the Internet makes it easy to confirm a business’s legitimacy. In this sense we’ve outlined some key points that will help you find the information you need.

Check the Address of the Loan Company

If the address has a “P.O. Box” address instead of a street address that’s a big red flag. Also be wary if you can’t find the address online, then that is another strike against the legitimacy of the loan company.

Does the Loan Company Require Advance Payment?

If the answer is yes then this company is not legitimate. Reputable loan companies disclose all fees up-front and deduct them from the loan amount you receive, instead of demanding money up-front. Don’t be fooled by promises that an advance payment will secure your loan.

Take the Loan Agreement to a Lawyer for Review

If you aren’t sure about a loan contract, an attorney will be able to determine if it is clear and legal. Avoid a company that rushes you. High-pressure tactics to hurry you into signing a contract are red flags suggesting you are dealing with a loan scammer. Legitimate lenders will not object to a review by your legal counsel. In fact, they and may even suggest that you do so.

Conduct a Search of the Better Business Bureau Database

Go to your local BBB website and select “Check out a business or charity.” You can then search by the loan company’s name, type of business along with other identifying information such as the website URL, email, physical address or phone number.

Contact Your State’s Financial Registration Agency or Banking Oversight Agency

Loan companies are required by law to register with state agencies to do business within a state. If a company is not legitimate, these government agencies will provide you with the information accordingly.

Dial the Phone Number of the Loan Company

It’s a bad sign if you can’t seem to reach any actual person and are cycled through a touch tone phone system. Be wary. Any reputable company will have customer-service representatives available to answer your questions. If the company doesn’t list a phone number at all then you definitely know this company is a scam.

Visit the Ripoff Report and Consumer Affairs Websites

Do a thorough search on the loan company you’re considering doing business with. Websites likeRipoffReport.com and ConsumerAffairs.com contain a database of complaints lodged against companies that have turned out to be fraudulent. By entering the name of the company in question, you will turn up any results that can give you an idea of its legitimacy, or lack thereof.

Look For a Company Email

It’s a big red flag if your correspondence is from a generic email address like a Gmail, Hotmail or outlook account, not to mention an email address that looks like it’s from a legitimate institution but is spelled incorrectly. You are most likely dealing with a scam loan company then.


Be aware, that if a loan offer seems too good to be true, it most likely is not good at all. Scammers prey on people desperate for financing by offering loans without credit or income verification. While this may look like an ideal solution when you are struggling the company may not be who they represent themselves as.

If you accept this offer hastily without determining its legitimacy, you can end up in a worse position than before. To spot a fraudulent loan offer do your research and make sure to know what to look for to verify the validity of the loan offer.


Works Cited

1 Bankrate “7 ways to spot personal loan scams” https://www.bankrate.com/loans/personal-loans/personal-loan-scam-signs/

2 The Nest “How to Tell If a Loan Offer Is Legit?” https://budgeting.thenest.com/tell-loan-offer-legit-23658.html

3 Finder.Com “How to avoid a personal loan scam” https://www.finder.com/personal-loan-scams

4 WikiHow “How to Check if a Company Is Genuine” https://www.wikihow.com/Check-if-a-Company-Is-Genuine

5 WilmerHale Legal Services Center of Harvard Law School “Predatory Lending and Consumer Protection Unit” http://www.legalservicescenter.org/get-legal-help/predatory-lending-and-consumer-protection-unit/

[/su_spoiler]