An emergency can hit a person at any time, often resulting in a severe financial crisis. Or, there could be some dire need in the family for which a person could require a lump sum. Not everyone has the resources to meet an emergency out of their own pockets, which is why borrowing money during such periods is a practical idea.

The best way is to look for a licensed money lender nearby. They can give you a loan at affordable rates of interest, and you can pay them back at a later date, subject to the terms and conditions agreed to by both parties.

Here’s how you can find the right money lender and avoid being scammed by unscrupulous ones.

Hallmarks of an Ethical Moneylender

1. License and Authentication

The best way to ensure that you find and choose the right moneylender is to check their license and authenticate their certifications. An authorised moneylender will have a dedicated website for their services, and you will also find them on local listings. Avoid lenders who tell you to keep the transaction under wraps or refuse to meet you in person, insisting on online payments only.

2. Check the Interest Rate

Licensed moneylenders will never charge above the permitted interest rate in your region. This is regardless of the borrower’s income. You can also check government websites to make sure they are offering you the correct rates.

3. Fees

The right moneylender will maintain transparency and tell you all that you need to know at the very beginning of the lending process. They will tell you about any additional processing fees and what other applicable charges you would have to pay for.

Unscrupulous lenders will refrain from telling you about the charges at the very onset so that they can extract money from you later. Do not sign any document before understanding all the clauses.

How to Avoid Pitfalls while Borrowing Money

Here are some effective ways to avoid getting ripped off by sham money lending companies.

• Check Verified Reviews

While doing your research, ensure that you always go through verified reviews to ensure the lender’s credibility. These reviews will have some details about where the person works or where they are from. Google also places these reviews high on their ranking because their specialised algorithm rules out most fake posts and reviews.

• Refuse Blank Documents

Some unscrupulous lenders might sweet-talk into taking a loan from them with promises of discount on interest rates and then ask you to sign a blank certificate, telling you that they will fill in the details later and take care of everything else.

This is one of the oldest tricks in the book, but many borrowers still tend to fall for it, mostly due to their desperation or circumstances. This is a highly shady tactic, as, once you sign it, they are free to print or write in anything on the contract, and can use it to extract more money from you later.

• Constant Advertising

Genuine moneylenders do not constantly feel the need to advertise themselves. They will not bombard you with spam emails or constant SMSes, nor will they call you up and urge you to borrow money.

Moreover, you might not even receive satisfactory answers if you dig in for additional information or ask for their registration number. Avoid these callers and check your listings to approach lenders who prefer doing their work silently and ethically.

You might find yourself in need of money at any time, but keeping your calm and looking for the correct avenues of borrowing money is far more practical than rushing to suspicious, unlicensed lenders without checking their background. With licensed money lenders, you are guaranteed safety, transparency and trust.