Are Online Personal Loans Safe?

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Just a couple of decades ago, getting a personal loan anywhere other than a bank or credit union was nearly impossible. In the digital age, online personal loans have become more common and have many advantages. It is more important than ever to ask yourself, are online personal loans safe? With a few precautions, the answer is yes!

Online personal loans may offer competitive rates, can be faster to obtain, and might have fewer requirements for borrowers – depending on the lender. But is your information secure? Yes, the process is completely safe and secure if the lender follows a few simple practices and you take steps to protect your information. Read on to learn what to look for in an online lender and how to keep yourself safe.

In the meantime, MoneyLion can help you find personal loan offers based on your background and the info you provide. You can get matched with offers for up to $50,000 from top providers. You can compare rates, terms, and fees from different lenders and choose the best offer for you.

Are online loans safe?

Lenders are responsible for protecting your private information. While even major banks have been vulnerable to malicious attacks in recent years and nothing online is 100% safe, online banks employ some of the best encryption systems available to protect your data.

Scammers could intercept your data when you log in to a bank or use a credit card. Keeping your personal and financial information secure should be one of the top priorities of any company, including banks, online lenders, payday loan lenders, and online stores. Most reputable online lending companies use bank-level encryption to protect your personal information and provide safe ways to get a loan. 

This technology includes proper encryption of information, so if it is intercepted, it will not have sensitive data like your Social Security number, bank account number, or credit score. Information transmitted through networks can be vulnerable to malicious attacks if the website’s owner has not used secure technology. 

How to keep your personal data safe when getting online personal loans

In addition to choosing a reputable online lender, there are steps you can take to protect yourself and help avoid online fraud. Here are the key things to consider.

1. Choose a reputable online lender

Choose a reputable online lender with a physical address and contact information on its website. Call the lender before entering your personal data if you are unsure it is safe. You can check reviews online or on the Better Business Bureau website to see if the lender is registered and check the rating there. 

Many online banks and fintech companies, including MoneyLion, already have an excellent reputation and robust security measures to protect your data. 

2. Make sure the website is secured 

Look for two simple signs that information entered on a personal loan website is secured and encrypted. When you look at the website address at the top of your browser, it should say “https” instead of “http” at the beginning of the address. The “s” indicates that the website is more secure. In addition, most browsers will also display an icon of a closed lock, showing the connection is secured and encrypted.

3. Protect privacy in public locations

Ensure no people can read the information on your screen if you are applying for a loan in a public location. Sit against a wall, at least a few feet away from other people, and be aware of your surroundings. If possible, manage your finances at home so you can be sure no one sees your information.

4. Use strong and unique passwords

Use a new password when you set up your login information with the online lender. The password should be at least eight characters long, include uppercase and lowercase letters, and have at least two numbers or special symbols. Using a unique password for each site makes you less likely to have a widespread problem if one of your passwords is somehow compromised.

5. Keep the printout copy of your loan application in a secure location

If you print out a copy of your loan application or other documentation, keep it in a secure location, such as a locked filing cabinet at home or work. If you decide later to throw away or recycle the paper, shred it first so others are less able to obtain your sensitive personal information.

6. Be cautious of phishing scams 

Phishing scams are rampant, and scammers are better than ever at appearing like legitimate institutions. Only provide personal information through email or phone if you have verified the source. 

If you receive an email from your bank requesting you to take action or log in, navigating directly to the bank’s website or opening the app is a safer option to avoid accidentally clicking a phishing email. If you can, avoid clicking links in emails, even if they appear legitimate, to avoid being caught in a phishing scam.

Likewise, if someone calls you saying they are from your bank, don’t provide personal information like your Social Security number, account password, security word, or mother’s maiden name. If they ask for this information, you can hang up and call the number you have for the bank directly. 

7. Regularly monitor your financial accounts and credit reports 

When you periodically check financial accounts and credit reports, you can quickly spot and report suspicious charges or new accounts. You can access your financial statements online through your bank’s website or app. 

To check your credit report, you’re entitled to a free annual credit report from each of the three main credit bureaus: Experian, Equifax, and Transunion. In addition, many banks and credit card issuers now offer free credit scores or monitoring that make it easier to spot unusual activity quickly. 

What to do if you become a victim of online personal loan scams

If you become a victim of online loan scams, you have resources. The first step is to stay calm and then start making phone calls. 

1. Contact your bank or financial institution

Your bank or financial institution can guide how to protect your accounts and potentially reverse unauthorized transactions. Contact each bank or credit card issuer where you have an account. 

You can also contact all three credit bureaus to freeze your credit temporarily. This action prevents others from opening new accounts in your name. See below for an alternative to this.

2. File a complaint with your local law enforcement agency 

To file a complaint with law enforcement, you will need to provide them with evidence or documentation you have related to the fraud, including email correspondence, direct messages, website login information, or screenshots you took while signing up. 

3. Contact the appropriate regulatory authorities

If you are a victim of fraud, you should also contact the relevant regulatory authorities, including the Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau. They can investigate and take action against the scammer or provide you with support and suggestions for further steps. 

4. Place a fraud alert on your credit file

Even if you already froze your credit, you can notify the credit reporting agencies of possible fraud. This process will help protect you from further fraudulent activity and make it more difficult for scammers to open new accounts in your name.

5. Keep all documentation related to the fraudulent activity

All documentation from the fraud can be used as evidence, including emails, text messages, or loan agreements. This evidence can be helpful when working with authorities, your bank, or credit reporting agencies.

Protecting Yourself Online

Overall, online personal loans are safe, provided you take a few precautions and check to see that the lender has secured its website. If your information is encrypted, it is just as safe to transmit it online as it is to give it to a banker at a brick-and-mortar location. Plus, getting a loan online, a debt consolidation loan, or a car loan online is much more convenient! 

Ready to learn what you could qualify for? MoneyLion can help you review personal loan offers. Get Started! 

FAQs

Is my personal information safe when applying for an online loan?

Following a few precautions, yes it is likely safe, if the online lender has a secured website, your information should be secure when applying for a loan online. 

Can I use an online personal loan for any purpose?

Generally, you can use an online personal loan for any purpose. Unless the lender has some stipulations in the contract, personal loans, regardless of the loan amount, can be used for anything you need, from an emergency medical expense to a car repair to home renovations. 

Are online personal loans more expensive than traditional loans?

No, online personal loans aren’t usually more expensive than traditional ones; in some cases, they could have lower interest rates. However, you may want to shop around for the best rates. 

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