Is it safe to take microloans?

Micro-loans are a simple and quick way to solve financial problems. Today they are provided by dozens of online services, which can be used by any adult citizen.

Lending in a microfinance organization has many advantages:

  • To get a loan it is enough to provide only a passport and an identification code;
  • No reference from workplace;
  • The whole procedure of obtaining a microloan takes from 5 to 40 minutes;
  • No guarantors;
  • The registration of the microloan takes place entirely online on the website or through borrow money app;
  • You can choose several ways to borrow money and repay the loan;
  • Such companies often conduct promotions, such as giving the first loan at 0%;
  • Over 90% of microcredit applications are approved (they cooperate even with people who have a bad credit history).

Although it’s possible to solve your financial problems with the help of microfinance organizations, some people are still afraid to apply to them. Most fears are based on rumors and stories that MFI deceive people. Is it really true? Let us try to find out.

Risks for borrowers when applying for a microloan

When applying for an online loan, the main risk is fraudsters who skillfully disguise themselves as honest microfinance organizations. More details at the link: There are several scams that can leave a trusting borrower exposed to the risk of losing money. Here are two of the most popular microloan scams:

  • Scammers ask to make an advance payment for providing financial services. If a lender asks to pay money even before he or she has issued the loan, this is a direct indication of fraud. Even if the lender asks to pay a minimal fee up front, promising to transfer the loan funds immediately afterwards, you should not do so. As a rule, only very credulous people are fooled by such a scheme.
  • Scammers use scans or photos of your passport to cheat other people or to get a loan from another financial institution. Today, to get an online loan in most companies it is obligatory to provide a passport photo or its scanned copy. This is quite common practice, because the lending company has to make sure who it gives the money to. However, if you send a copy of your passport, it threatens with unpleasant consequences. There have been cases where swindlers have used someone else’s documents to take out huge loans, and people have ended up having to pay them back or sue in an attempt to get out of debt.

Nevertheless, if you use the services of reliable companies, you can easily avoid all these risks.