Sometimes, when we take out a loan, we become so focused on the outcome (e.g. a beautiful new car) that we miss the red flags of a scam.
In this guide to spotting and avoiding scams, we cover some of the most common car loan scams so you know what to look out for and when to say no.
Common types of car loan scams
Loan deposit fraud
In this situation, a scammer will pose as a legitimate lender. They’ll offer to lend you money without the standard fees or credit check – all they’ll ask is that you make a deposit as an “insurance” or “administration” fee. Then, once you’ve made the deposit, they’ll disappear with your money, leaving you empty-handed.
Loan phishing scams
Rather than obtaining money directly, Phishing scams try to collect your sensitive personal information. Scammers can then use this information to access your bank accounts and credit cards or to commit identity theft. Usually, the scammer will gather this information by posing as a representative of a well-known lender, maybe even one you’ve been in contact with recently. It’s common for scammers to combine phishing with loan deposit fraud schemes.
Fake loan apps
Similar to phishing schemes, fake loan apps are a way for scammers to collect your sensitive data while posing as a legitimate lender. You’ll likely receive a text message promoting the app or see an advertisement on social media that will promise attractive loan terms and low or no fees or interest. Once you’ve downloaded the app, you’ll be prompted to enter personal information, like your name, address, bank accounts, and photos of your ID documents. The scammer can then use this information to access your accounts or steal your identity.
Identity theft loans
This kind of scam requires the scammer to already have access to your sensitive identity data, which they then use to take out a loan in your name. It could be done in conjunction with a phishing or fake loan app scam, as these are common methods for illegally obtaining this kind of identity information. The end result can be a large amount of debt in your name that you have no knowledge of.
Loan repayment fraud
This scam typically occurs when you already have a legitimate car loan. You’ll receive an email or letter that appears to be from your lender saying that you’ve missed a payment and demanding that you make it immediately. They’ll likely threaten you with penalties or say they’ll take control of your bank accounts if you fail to repay the amount owing. This scam works particularly well on people with multiple loans because they’re more likely to miss an actual payment and confuse the letter or email for a legitimate warning from their lender.
Avoiding a car payment scam
Things to look out for
If you’re considering a loan that has any of the following red flags, think twice before moving forward:
- It’s too good to be true: If the lender promises unusually low fees or guaranteed approval, it’s likely a scam.
- There’s unreasonable time pressure: Any communication that pressures you to act quickly or risk a significant financial consequence probably isn’t authentic.
- You’re asked to pay pre-loan fees: A legitimate lender will not ask you to pay fees before approving your loan.
- The “lender” cold calls or messages you: If you receive an unsolicited offer from a lender, you should not accept it or click any links included in the message.
- There are no contact or licence details on their website: Real lenders will always have easily accessible phone numbers and physical addresses listed on their website, as well as a credit licence number, usually found at the bottom of the page.
- They request untraceable payment: If a lender requests payment of fees or a deposit through difficult-to-trace methods, like cryptocurrency or gift cards, it’s unlikely to be legitimate.
What to do if you think you’ve been scammed
If you think you’ve been scammed, you need to act fast. The Australian Government’s Moneysmart resource provides a simple and straightforward outline of the steps you must take immediately.
Yes Loans, no scams.
At Yes Loans, we understand the importance of finding the right car loan – safely and easily. We make sure every step of your loan process is clear, transparent, and stress-free, so you can get into your new car with confidence.
Contact us today to enquire about car finance in Perth and Australia-wide. We say YES more often.
