7 Signs an Online Loan Company is Legitimate

Top10.com StaffByTop10.com StaffMar. 10, 2019
Learn how to check if a loan company is legitimate
Knowing what to look for in an online personal loan lender can save you time and energy down the road. Here are 7 signs that lender is legitimate.

There are plenty of ways to a loan and a popular choice nowadays is to go with one of the many online personal loan providers out there. If you do not like the terms of a tradition lender, like a large bank, or you don’t have the credit score required, there is likely a non-traditional online lender ready and willing to approve your loan application. Make sure to figure out whether you’d be more suited to an online personal loan or a traditional bank loan. Borrowing from a lender who does not have a reputable household name can be a little uneasy. How can you check if a loan company is legitimate? 

Regardless if you are looking for a payday loan, student loan, or business loan, you need to know that you are working with a legitimate loan company. While understanding how a personal loan works is the first step at sniffing out the scammers, it’s important to know what to keep an eye out for when searching for your loan provider. If you are in the beginning stages of finding a lender, first review the following telltale signs of a legitimate lender before you sign any agreement.

1. It Has a Physical Location

This is the first sign of legitimacy that you should look for when researching loan providers. Most fraudulent companies do not post an address so it makes it difficult to contact them in the event a borrower wants to pursue legal action. If you are borrowing from an online lender you obviously do not need to walk into a physical office or building, but the lending company should still have a corporate address listed on their website. If it does post its address, that’s a step in the right direction, but you should still Google it to make sure it is an actual address and not a home or abandoned building. Another suggestion is to phone or email the lender. The person on the other end should sound professional and provide a level of customer support you would expect from a lender you can trust. Our review of SoFi, for example, contains contact information that you can also find on its website.

2. It Performs Credit Checks

If you’ve been denied a loan due to a poor credit history, it can be tempting to borrow from a lender that doesn’t perform credit checks. In fact, this is a big red flag. This company is most likely only interested in obtaining your personal information. Any legitimate lender will require a credit check which involves a hard pull of your credit report. A credit check is the only way that a lender can review your financial history to determine how high risk of a borrower you would be. LendingTree, for example, performs a credit score check and accepts credit scores from fair to excellent.

3. It Doesn't Charge Upfront Fees

Be very wary of a lender that requires an upfront application fee just to apply for a loan. Similar to telephone or email scams that request payment before a service, if the lender asks for money before you receive your loan, walk away. It needs to be made very clear that never, under any circumstance, should you send money to any loan company just to secure a loan – even if the lender users words like “processing” or “insurance.” What you might see from legitimate lenders is an origination fee, but that typically comes off the loan amount, and is not an upfront payment.

Even more important, a lender should never ask you to wire them money to secure a loan. Scammers prefer to use wire transfers as a way to send and receive money because it is very difficult to trace the transaction.

4. It Has Clear Terms and Conditions

Before you apply for any loan, make sure that the terms of the loan are transparent and you understand them. What is the APR? What is the payback period? What is the maximum you can borrow? A legitimate lender can provide clarity on its loan terms and tell you exactly how much the loan will cost at the end of its life. If the lender in question can’t do that, it is most likely a scam. All of these personal loan companies provide clear rates, loan terms, and other requirements.

5. It Has Customer Reviews

When you are in a financial crisis there’s no doubt that you need access to money, quickly. Even still, it is best to take some time to research potential lenders to find out as many credible details as you can about the lender to avoid becoming a scam victim. A quick Google search should bring up multiple reviews and ratings, both positive and negative. If you can’t find anything at all, chances are it’s a scam.

You can also check with the Better Business Bureau (BBB), which will indicate if the lender is registered in your state and allow you to read resolved and unresolved complaints that it may have in its history. 

While you are searching online reviews, take a moment to check out the lender’s website. Two quick things to look for to know if they’re legitimate are to search for a padlock icon on their website and look for HTTPS in the URL. Both indicate that your information will remain secure and protected.

6. It is Registered in Your State

The United States Attorney General’s Office mandates that all lenders are registered in every single state they do business in. This registration weeds out the scams and confirms the lender is legitimate. Registered lenders are monitored by the Attorney General, so you can rest assured that these lenders are not making fraudulent promises or have malicious lending practices. Registration information is usually found on a lender’s website, but you can also contact the Attorney General or Department of Finance to confirm.

7. It Doesn’t Pressure You

A lender should never pressure you into signing a loan agreement. You should never hear phrases such as “a limited time offer,” “offer expires tomorrow so act fast,” or “money back.” If it seems too good to be true, it probably is. Lenders use these tactics to get potential borrowers to divulge their personal information and sign loan agreements before they can detect they are working with an illegitimate lender. You do not want to work with a lender who would rather sell you something than help you find the best rates for your current financial needs. 

A legitimate lender won’t offer special promotions – the rates should be steady and only fluctuate with the market. What rate you qualify for will depend on a number of factors, but your credit score typically dictates how good of a rate you will receive—not a marketing promotion.


Research and lots of details are your best friends when searching for a personal loan lender. Before you even begin the application process, the more credible details you have on the lender, the safer you and your money will be. Start your research here with honest, detailed reviews of today’s top online lenders. The lender should be helpful and be able to tell you upfront the terms of their loan, without pressuring you into any agreement. It should also have a corporate address and a phone number or email address where you can easily reach a professional company representative. When you’re ready to apply for a personal loan, this ultimate guide to personal loans can help you understand the different types of loans and their details.

The most important thing is to remember that a lender should never, under any circumstance ask you for money upfront just to start the application process. If you have done your research and are still uneasy, contact your state’s Attorney General office to confirm the legitimacy of the lender.

Top10.com StaffByTop10.com StaffJun. 24, 2019
Our editorial staff is comprised of writers who are knowledgeable about financial services. We specialize in simplifying the process of choosing the right personal loan provider for your needs.