Loan scams will land you deeper in debt
Low interest is a warning bell
When Sam* (not his real name) fell behind on his home loan instalments, he decided to take out a personal loan, but instead of solving his problems, he got deeper into financial trouble after falling for a scam.
“I went on to the Direct Axis website – I had taken a loan from them many years ago – and filled in a few basic details such as my name, ID number, cellphone number and gross monthly income. An automated response said I was not eligible for a loan, presumably because I was behind on my home loan payments.”
A few minutes later, Sam received a promotional e-mail, apparently from Direct Axis, offering personal loans at an interest rate of just 5% a year, and welcoming applicants who are “blacklisted”.
He responded expressing his annoyance at having just had his loan application rejected only to receive such an e-mail.
“I was quite surprised when I received a reply inviting me to apply for a loan, and asking for documents such as a scan of my ID and three months’ worth of bank statements.
“I sent these off, and was told later the same day I had been approved for a loan of R20 000, repayable over two years. This was on a Friday.
“On the Monday, when I inquired about the money, I was asked to pay R2 999 in respect of legal fees to draw up the loan agreement. I duly paid this sum into a bank account.”
The fraudsters then got greedy, and attempted to extract more money. They wanted R5 500 to cover “insurance” for the two-year loan. It was at this point that Sam realised he had been scammed.
“I visited the Hellopeter website, where I read similar stories.”
Sam said that with the wisdom of hindsight, “the signs of fraud were everywhere”. For instance, the e-mail was hosted on Outlook, and the logos on the letterheads showed signs of copy-and-paste.
He said the offer to borrow money at such a low interest rate should have rung an alarm bell. So, too, should the reference to “blacklisted” applicants. Any credit provider lending to consumers with impaired credit records is engaging in reckless lending. And personal loans attract interest much higher than 5% a year.
Sam said that aside from the loss of R2 999, he was humiliated, because he has warned his family about such scams for years.
“I was caught only because I was stressed and not paying attention.
“My advice to anyone else seeking a loan: do not respond directly to an e-mail. Rather visit the website of the institution. If in doubt, make a phone call. Above all, be deeply suspicious of offers of a loan at an unrealistically low interest rate. Banks and loan sharks are not philanthropic by nature.”
Alet Griesel, the chief risk officer at Direct Axis, declined to say how many customers had been caught in such a scam this year. She said the company used its website, social and community media to warn clients about scams.