When you need to borrow, the last thing you want is to hand money or personal information to a fraudster. Unfortunately, loan scams are designed to look exactly like the real thing, and they often target people who have been turned down elsewhere.
V5 Solutions has put together a checklist you can run through before dealing with any lender, followed by an explanation of the scams that most often catch borrowers out.
A Five-Point Checklist Before You Deal With Any Lender
- Is the firm authorised? Search for it on the Financial Services Register. Consumer credit lenders and brokers in the UK must be authorised by the Financial Conduct Authority.
- Do the contact details match? Compare the website, phone number and email address with those recorded on the Register. Any mismatch is a red flag.
- Is it on the FCA Warning List? The FCA publishes firms it believes are operating without permission or impersonating real businesses.
- Are you being asked for money first? A request for a payment before the loan is paid out is one of the clearest signs of fraud.
- Is there pressure to act now? Genuine lenders give you time to read the agreement and ask questions.
If a firm fails any of these checks, stop and do not send money or documents.
How Does Upfront Fee Fraud Work?
The scam usually begins with an advert, a text or a call offering a loan regardless of your credit history. After a brief "application", you are told you are approved but must first pay a fee for processing, insurance or to prove you can make repayments. The payment is often requested by bank transfer or in vouchers, which are hard to trace or reverse. Once it is sent, further fees may be demanded, and the loan never materialises.
No legitimate lender can promise approval without assessing your circumstances. At V5 Solutions, for example, decisions are based on your vehicle's value and an affordability assessment, which includes reviewing bank statements and a call from an underwriter. You can read about the full process on our how logbook loans work page.
What Is a Clone Firm?
Clone firms borrow the identity of a genuine, authorised company, sometimes copying its branding and registration number, but supply their own contact details. Because the name checks out on the Register, victims assume they are safe.
The defence is simple: only use the contact details listed on the Register or on the company's own website, which you have typed in yourself. If you are ever unsure whether a call or message really came from V5 Solutions, contact us directly through our contact page.
Phishing and Impersonation Messages
Many scams start with a text, email or call that appears to come from a bank, a government department or a delivery firm. The message often warns of a problem with your account or a missed payment and includes a link to a convincing copy of a real website.
- Do not use links or phone numbers from an unexpected message.
- Never disclose passwords, PINs or verification codes.
- Forward suspicious texts to 7726, and pass on dubious emails by sending them to report@phishing.gov.uk.
Scams When Buying or Selling a Vehicle
Vehicle fraud affects both sides of a private sale. Buyers can be sold a car that is stolen, has been cloned with another vehicle's registration, or still has finance secured against it. Check the V5C carefully, view the car at the registered keeper's address and use a vehicle history check before paying.
Sellers face fake payment confirmations, cheques that bounce after the car has gone and "overpayment" requests for a refund. Wait until the money is cleared and showing in your account before releasing the vehicle or its documents.
Reporting a Scam and Getting Support
If you have lost money, contact your bank immediately. In England, Wales and Northern Ireland, report fraud to Report Fraud. In Scotland, contact Police Scotland on 101. If a scam has left you with debts, MoneyHelper can point you towards free advice.
Finally, remember that even genuine secured borrowing carries risk. A logbook loan is an expensive form of credit, so only borrow what you can comfortably repay. This article is general information, not financial advice.
Your car may be repossessed if you do not keep up repayments on a loan secured against it.
