Beware of Cheap, Pre-Approved Loan Scams: My Costly Experience and How to Stay Safe

My Story: How I Got Scammed

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A few days ago, I received a message from what seemed to be Bank of Baroda offering me a loan of ₹5 lakhs. The message looked genuine, and since I was in need of financial assistance, I decided to follow up.

The person on the other end asked me to pay a processing fee of ₹1,650 before the loan could be approved. It seemed like a small amount, and I transferred it without much thought. However, as soon as I paid, they kept coming up with new reasons to demand more money—some for documentation, others for verification, and then additional charges to “finalize” the loan.

Trusting the process, I continued paying all the amounts they claimed were required. Each time I made a payment, I was assured that my loan was almost approved, and just one last step was left. But the approvals never came.

Finally, when I realized I had already paid a significant amount with no loan in sight, I confronted the person. Instead of approving my loan, he told me that I had to deposit ₹5,400 so that all the money I had paid could be refunded back into my account. That was the moment it hit me - I had been scammed.

How This Loan Fraud Happened

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Here’s a breakdown of how scammers operate in such frauds:

1. Fake Loan Offers via SMS, Calls, Social Media, and Messaging Apps: Scammers send messages or make calls offering pre-approved loans with attractive terms, often impersonating well-known banks. These fraudulent loan offers also appear on social media pages, online ads, WhatsApp groups, Telegram channels, and other chat platforms. They use professional language to make the offer sound legitimate and create urgency to pressure victims into responding quickly. Many victims fall into the trap because the messages appear to come from trusted sources or official-looking profiles.
2. Small Initial Processing Fee: Once a victim expresses interest, the scammer asks for a small processing fee, claiming it is required to initiate the loan approval. Since legitimate loans sometimes involve minor fees, victims may not find this unusual. The scammers deliberately keep this first amount low to gain trust and make the victim more likely to proceed with future payments.
3. Repeated Additional Charges: After the initial payment, the fraudsters introduce additional fees such as documentation charges, loan insurance, government taxes, or bank processing fees. They insist that each charge is a one-time requirement for final approval, making victims believe they are close to receiving the loan. With every payment made, the fraudsters tighten their grip, exploiting the victim’s financial distress and trust.
4. Promise of Refund: When victims start questioning the process, scammers introduce the idea of a refund, claiming that all the paid fees will be returned after one final payment. This tactic convinces victims to make yet another transfer, hoping to recover their lost money. However, this “refund” never happens, and instead, the scammers vanish after collecting as much money as possible.
5. Disappearing Act: Once the scammers have extracted the maximum amount, they stop responding. Their contact numbers become unreachable, WhatsApp profiles disappear, and social media accounts get deleted. Victims are left with no way to reach the fraudsters, and at this point, the realization of the scam fully sets in. By then, the financial loss has already occurred, and the chances of recovering the money are slim.

Warning Signs: When to Exercise Caution

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• 🔴 Upfront Payment Request: Being asked to pay a processing fee before the loan is approved.

• 🔴 Repeated Additional Charges: Continuous demands for more money under various pretexts like documentation, verification, or “finalization” fees.

• 🔴 False Assurance & Pressure: Being repeatedly told the loan is “almost approved” to encourage further payments.

• 🔴 Refund Trick: Requesting extra money to supposedly refund the amounts already paid.

How to Protect Yourself from Loan Scams

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1. Verify the Source: If you receive a loan offer, always check directly with the official bank’s website or customer service before engaging further. Banks do not offer loans randomly via SMS, calls, or social media ads.
2. No Genuine Loan Requires Advance Payments: Legitimate financial institutions do not ask for processing fees or any upfront payments before disbursing a loan. If a lender demands money before approval, it is likely a scam.
3. Be Wary of Unofficial Communication: If you receive loan offers via WhatsApp, Telegram, social media, or personal phone numbers instead of official bank emails or websites, it’s a red flag. Always check whether the lender is registered with the Reserve Bank of India (RBI) before proceeding.
4. Check for Warning Signs: Mentioned above
5. Trust Your Instincts: If an offer seems too good to be true or you feel uneasy about the process, take a step back and research thoroughly before making any payments. Scammers rely on deception and psychological pressure—don’t fall for it.
6. Report Suspicious Activity Immediately: If you suspect fraud, reporting it on the cybercrime.gov.in portal is a must. Additionally, inform your bank and visit your local police station or cyber police station for further assistance.