Loan company, your bank details & how to ensure its safety

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Is it safe to share the account number, IFSC code and your other banking details with a loan company? Most people are apprehensive when instant loan websites or personal loan apps ask for bank details to process their loan application.

How to make sure that it is safe to share your bank details? If you know the reason for asking for your personal information and if the request has come from a reputed loan website or app, then it’s probably safe.

However, there are steps you can follow to ensure that you are sharing your bank details with a legit loan company and that your information is safe. Follow these steps:

Step 1. Find out why the loan company needs your bank details
There are a number of reasons why loan companies would ask for your bank account information. Some of them are:

  • To check your total monthly income to assess whether you are eligible for the loan.
  • To look at your past banking statements to determine your financial status and average monthly saving and spending ratio. This gives them an idea of whether you can afford to pay the loan repayments on time.
  • To check whether you are servicing other loans or debts, and how long until your debts are paid off. If you are already making monthly payments to a loan, your capacity to afford more loans can automatically decrease.
  • To check whether you are making your credit card and other debt payments on time.
  • To access your bank information so that the loan provider can analyse the data better and approve your loan faster.

Now that you know the reasons why banks or loan companies can ask for bank information, your next logical step is to ensure that your information is safe.

Step 2: Ensure your information is safe
Here’s a checklist to ensure that you are absolutely sure about sharing your banking information for a loan:

Is the loan company you are sharing your banking information with legitimate?
The first step before giving out any information, financial or personal, is to check whether you are dealing with a legitimate company. Here are a few things you can do to rule out fraudsters:

The website’s URL doesn’t begin with HTTPS encryption. A secure site will always have HTTPS encryption. The easiest way to check for this is to look at the beginning of the URL. Your browser may include a padlock or green colouring to confirm the HTTPS encryption.

Your browser warns you that the page you are about to visit is insecure or not private. The loaning company asks you to pay a fee before applying for a loan.

Ask questions
Before you share any information, you have the right to ask questions regarding the safety of your sensitive information.

Check their FAQ section
Most of the questions you may have in mind are mostly answered in the company website’s FAQ section. If you don’t find the answers or if you have any other queries, do not hesitate to ask them.

Check their consumer lending experience
Find information about how many customers have they serviced so far, what type of loans do they offer, etc. Such information will help you trust the company and give you the confidence to share the bank details.

What medium do they use to share your bank details?
Although emails are a preferred mode for official communication, avoid sharing highly confidential information over them. The same goes for phone calls and text messages. Any legit company will never ask for highly sensitive information over a call or a text. So, avoid them altogether.

You can share your bank details with online loan providers and personal loan apps that offer maximum security.

These are the things you need to keep in mind before allowing any loan provider to access your banking data. Do your due diligence before sharing your information. Also, monitor your bank accounts for fraudulent activities to mitigate risks and catch potential fraud.

Essentially, you need to be aware of who you’ve authorised to have access to your information and for what reason.

(This article is written by Shiv Nanda, Financial Analyst – Money Tap. The views expressed in this article are of the author).

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