What is a Loan Scam?

A loan scam is a type of financial fraud where scammers deceive individuals into believing they can obtain a loan with favorable terms but instead steal their money or personal information. Victims are often lured with promises of quick approval, low interest rates, or loans that don't require credit checks. These scams can result in financial losses and identity theft.

How to spot a Loan Scam? (Common Warning Signs)

  1. Guaranteed Approval: The scammer promises that the loan will be approved instantly even with bad credit. 
  2. Upfront Payment Required: You’re asked to pay a “processing fee,” “stamp duty,” or “insurance” before getting the loan.
  3. No Physical Office or License: The lender avoids giving clear business details or registration information.
  4. Too Easy Process: No background checks, no documents needed and just pay and get the loan.
  5. Unprofessional Communication: Poor grammar, casual language, or communication only through WhatsApp.
  6. Pressure to Act Fast: You're told the loan offer is “limited” or will expire soon.
  7. Fake Documents or Receipts: You receive forged or edited approval letters, payment slips, or Bank Negara Malaysia logos.
  8. Personal Bank Accounts Used: Payment is requested to an individual’s account, not a company account.

How to prevent Loan Scams?

  1. Only apply through licensed financial institutions or banks.
  2. Check if the company is registered with Bank Negara Malaysia (BNM).
  3. Never pay upfront fees before receiving the loan.
  4. Avoid deals made through WhatsApp, Telegram, or social media without formal agreement or paperwork.
  5. Do your research: Google the company name + “scam” or check for reviews.
  6. Be cautious of deals that sound too easy or too good to be true.

Example of Loan Scam Scenario:

Ali was urgently looking for a personal loan to settle his car repair bills. While browsing Facebook, he saw an advertisement that says:

“Get Instant Loan – No Documents Needed! Approval in 1 Hour!”

Ali contacted the “loan agent” through WhatsApp. The agent claimed he was eligible for a RM20,000 loan and just needed to pay RM400 upfront for "processing and insurance fees." The agent even sent a fake approval letter with a logo that looked like it came from Bank Simpanan Nasional. Trusting the agent, Ali transferred the RM400. A few hours later, the agent asked for another RM250 for “tax clearance”, claiming it was needed before the money could be released. Ali began to feel uneasy. He checked the agent's phone number using Semak Mule — and it was flagged as linked to scams. The agent stopped replying. Ali never received the RM20,000 loan, and he lost his money.

What Went Wrong:

  1. Ali believed the promise of “easy approval” without proper verification.
  2. He paid fees upfront before receiving any money.
  3. He trusted an unlicensed agent who only communicated via WhatsApp.
  4. The approval letter was fake, made to look official using copied BSN logos.
  5. He didn’t check the agent’s legitimacy before transferring money.

Lesson Learned:

  • Always be careful with loan offers that seem too easy or fast.
  • If something feels off, it’s better to stop and verify first.