Beware of The Financial Intermediary Trap!

"You have to repay your loans. Don't pay any intermediaries." is a warning message on all financial institution ads. This is because some unscrupulous financial intermediaries charge high handling fees, consultation fees, and service fees with the excuse of helping people to apply for personal loans. If you want to receive the full amount of the loan you apply for, you need to know about the difference between licensed money lenders and financial intermediaries, and how to avoid the traps you can fall in to.

What are financial intermediaries?

Financial intermediaries are not real financial institutions, but third-party institutions acting as agents who help people to apply for lower interest rate loans in exchange for the handling fee from financial institutions. Unscrupulous financial intermediaries charge the applicants steep handling fees with the excuse of offering financial assessment service or helping to apply for personal loans. Often times they will lure people to other financial institutions for more loans to cover to previous ones, in order to get handling fee in multiple times. Those with bad financial record or a desperate need for cash are easy targets to them.

The common tricks of unscrupulous financial intermediaries

Unscrupulous financial intermediaries collect personal data from illegal means and phone scam their targets. Here are a few common tricks they use:

• Claim they can help to apply for loans with a low interest rate and low criterion, with the promise of "no charge without result". This method lures people with financial difficulties into borrowing money.
• Pretend to be law firms or accounting firms that provide services like loan record improvement, debt consolidation or accounting advisory, in order to scam large consultation fees. These false claims of professionalism are a trap to lure unsuspecting victims.
• Pretend to be calling from banks, financial institutions, or government departments about problems in the personal loans or mortgages victims are applying for. They often request debt consolidation, property refinancing, or mortgage top up that the victim does not require. In some cases, the unscrupulous financial intermediaries will set up their offices in decent commercial areas, such as Central, to lower the guards of potential victims.

Be cautious to avoid being scammed

The safest way to not fall prey to unscrupulous financial intermediaries is borrowing money from licensed money lenders with good credibility, such as Promise. Financial institutions with a money lender's license number are regulated by the government, which protects the consumers. The personal loan plans of Promise offer annual percentage rates as low as 1.12% without a handling fee, which is flexible to the different needs of consumers.

Finally, applicants should only sign contracts with a clear understanding of the contract details.

If we can make a better use of a personal loan, it will be more flexible when we are in sudden need of cash. However, we should always pay attention when applying for loans to avoid scams from illegal financial intermediaries. Promise never appoints any third-party intermediaries, so if someone claims they are calling to help you apply for a Promise loan, do not fall into their trap!