Borrower Beware: Loan Scams in the Philippines to Avoid 

In 2023, the Philippine National Police – Anti Cybercrime Group (PNP-ACG) received more than 8,000 complaints of online scams, including loan-related frauds. The victims lost over more than ₱155 million from January to August 2023.^[1]

Before dealing with a lender, take precautions to avoid losing money. Keep reading to know the most common loan scams in the Philippines and how to avoid them. 

What are Loan Scams?

Loan scams are acts where scammers pretend to be legitimate lenders. These fraudsters offer loan amounts and rates that seem too good to be true.

Some may ask you to pay upfront fees before they release the money, only to disappear once they’re paid. Some also collect personal details so they can access your online wallet, bank account, and other financial assets.

Keep in mind that even some legitimate lenders operate in a “scammy" way. They take advantage of borrowers through high interest rates, hidden charges, and previously undisclosed fees. 

Related: How Many Concurrent Personal Loans Can You Have?

List of Common Loan Scams in the Philippines

Don’t let the urgency of your situation cloud your judgment when borrowing money. Here are some of the most common loan scams to avoid: 

❌ Fake Lending Companies 

You can find plenty of fake lending companies online. They target victims via fake apps, social media pages, and messaging applications through which they harvest victims’ sensitive information. 

Fake lending companies may also operate offline, heavily relying on the victim’s trust and affinity. They offer enticing loan packages in exchange for collateral. Once they get the collateral, they leave the victim hanging. 

❌ Phishing Scams

Fake lenders often employ phishing scams. Such online loan scams in the Philippines involve fraudsters sending victims an SMS or email containing a link to a fake loan website. Victims apply for a loan and enter their personal data on the fake website.

The scammer will then use their victim’s data in malicious ways. 

❌ Advance Fee Scam 

Some loan scammers require the borrower to give an advance payment to prove their repayment capacity. In some cases, the fee is called a “processing fee.” Usually, this fee is quite large. 

Be wary if your lender asks for a sizable amount in exchange for the release of loan proceeds. Case in point: the OFW who fell victim to this scam in 2023.^[2]

The victim found the perpetrator of this loan scam on Facebook and started transacting with them on Telegram. She provided an advance payment to release the funds, but then was told she sent it to the wrong destination account. 

Next, she was told she needed to pay for a new OTP, as her previous OTP was allegedly compromised. Once the OTP issue was dealt with, the lender told the borrower to pay the loan assistant to increase her credit score.

❌ Car Loan Scam 

Car loan scams in the Philippines come in various forms such as “pasalo” or “labas-casa” schemes. 

In a “pasalo” scheme, the scammer targets two parties: the buyer who wants to save money by buying an amortized car, and the seller who wants to turn over their car loan obligations to the buyer.  The scammer buys the car from the seller and agrees to pay the remaining amortization. 

However, the scammer won’t assume the payments for the car loan. Instead, they will sell the car to another buyer and hand over fake documents. The result? The original car owner defaults on his loan while the buyer gets nothing. 

A “labas-casa” scheme, on the other hand, compels the victim to take on a car loan they cannot afford. In one example, the scammer enticed public school teachers to apply for a car loan in exchange for cash and potential passive income if the vehicle is enrolled in a transport network vehicle service (TNVS). But once the car loan was approved and the vehicle was turned over, the scammer abandoned the victims, putting them in debt.^[3] 

Related:

• Personal Loan vs Car Loan: Which is Better for Financing a Car?
• Ride On: Motorcycle Loans in the Philippines and How to Apply for One

❌ Hidden Charges

Opportunistic lenders are deliberately vague with their fees and charges. Those who offer unbelievably low interest rates often make up for it with hidden charges such as high processing fees, origination fees, etc. If it's too good to be true, it probably is.

❌ Collection Harassment

While not exactly a loan app scam, this deserves a spot in this article for the annoyance and distress it causes. In this situation, the lender resorts to harassment and public shaming to make the borrower settle their dues. 

Some lenders may bombard you with calls and messages even if your due date is still far away. If you give your lending app permission to access your contacts, the lender may message your family, friends, and colleagues, shaming you for not being able to pay the loan on time. 

✅ Never Worry About Scams with Legit Loans

To borrow money with peace of mind, deal only with reputable lenders. Compare your options and apply via Moneymax: 

Provider	Loan Amount	Monthly Add-on Rate	Minimum Annual Income	Approval Time
UnionBank Personal Loan	Up to ₱2 million	1.29%	₱250,000	As fast as 5 minutes
UNO Digital Bank Personal Loan	₱10,000 to ₱500,000	2%	₱420,000	7 banking days
Metrobank Personal Loan	₱20,000 to ₱2 million	1.25% to 1.75%	₱350,000	7 banking days
BPI Personal Loan	₱20,000 to  ₱3 million	1.2%	₱180,000	5 to 7 banking days
Tonik Credit Builder	Up to ₱20,000	4.84%	Inquire with Tonik	2 banking days
Tala Loan	₱1,000 to ₱25,000	0.43% to 0.5% daily	None	24 hours
HSBC Personal Loan	₱30,000 to ₱500,000	0.65%	₱168,000	5 banking days
CIMB Personal Loan	₱30,000 to ₱1 million	As low as 0.83%	₱180,000	2 banking days
Maybank Personal Loan	₱50,000 to ₱1 million	1.3%	₱300,000	5 to 10 banking days
RCBC Bank Personal Loan	Up to ₱1 million	1.3%	₱360,000	5 to 7 banking days
SB Finance Personal Loan	₱30,000 to ₱2 million	2%	₱180,000	5 to 7 banking days
PSBank Personal Loan	₱20,000 to ₱250,000	1.75% or 2.5%	₱180,000	5 to 9 banking days

What to Do if You Become a Victim of a Lending Scam

How to report online loan scams in the Philippines? What are the next steps if the lender defrauds you? Take note of the following: 

👉 Cancel Your Transaction

Just realized you’re caught in an advance payment scam? If you used your credit card or bank account to pay the fraudster, immediately call your bank to stop the transaction. If you provided the scammer with your banking details, watch out for unauthorized transactions and report the activity to your bank. 

While you’re at it, transfer the remaining money to another account or lock your credit card. That way, you can minimize your losses. 

👉 Document Your Transactions with the Scammer 

Keep all receipts, contracts, and other documents you received from the scammer. If the transaction happened online, take screenshots of the messages and the app. 

👉 Report to the Proper Authorities 

Lodge a report to the concerned authorities. To go after the fraudster, head to the PNP Anti-Cybercrime Group or NBI. Next, report the incident to the SEC to give them a heads-up on the scam, so they can put the word out there for other potential victims. 

👉 Talk to a Lawyer 

If your case is quite complex and involves a large sum of money, a lawyer will walk you through your rights as a borrower, especially when dealing with harassment from a lender. In case of loss, you and your lawyer may discuss strategies on how to take back the money. 

How to Avoid Loan Scams 

To avoid lending scams, here are things you should do: 

👍 Know the Classic Signs of a Loan Scam 

Whether they’re offline or online scams in the Philippines, there are a few recurring signs you can spot, such as the following: 

• Sure approval - Banks and legitimate lending companies are strict with requirements. If a lender guarantees approval even before seeing the requirements, consider that a red flag. 
• Upfront costs - If a lender requires you to pay certain fees even before you get the loan proceeds, they’re likely a scammer. Legitimate lenders deduct the charges from the loan amount or integrate them into your repayment. 
• High-pressure offers - Fraudsters always communicate their offers with a sense of urgency, leaving you no time to decide. They may say that their discounted interest rate is a limited-time offer or give you a strict deadline when signing a contract. Remember that legitimate lenders always give clients enough time to make a smart decision. 
• No contact details - Once the con is over, you won’t be able to contact the scammer since they don’t have transparent channels. And even if they give you their contact details, chances are they’re fake. 

👍 Check with the SEC

Make sure that the lender is legit by checking with the Securities and Exchange Commission (SEC). Check out the Securities and Exchange Commission (SEC)’s List of Lending Companies.^[4] However, keep in mind that this list is subject to updates.

While it’s difficult to find a comprehensive online loan scammer list in the Philippines, you can always check the SEC’s List of Revoked and Suspended Lending Companies^[5] as well.

👍 Be Wary of Loan Offers Sent via Text or Emails

Scammers use SMS and email to persuade people to apply for a loan. If these offers are unsolicited and come from a suspicious contact number or email address, they’re likely scams. 

👍 Make Sure the Lending Website is Legit and Secure 

A lot of reputable lenders use websites to facilitate loan applications. However, scammers may impersonate a legitimate website through typosquatting, a method that capitalizes on users making typos when typing the web address. 

Since the fake website’s design and feel are copied from the original, the victim may not realize they’re in a scammer’s domain. As such, they may enter personal details that the fraudster will then steal. 

Also, make sure that the website is safe and secure. One such indicator is that the website uses “https” in its URL. 

Related:

• Loan Terminology Glossary: Words to Know Before You Sign That Contract
• 8 Tips for Responsible Borrowing: How to Manage a Personal Loan

Final Thoughts 

Loan scams take away not only your money but also your peace of mind. Thankfully, scammers’ modus operandi are easy to spot. 

Just remember that if it’s too good to be true, it probably is. You can also sense the con if the lender pressures you to sign the contract or pay upfront fees. 

Always do your research to make sure you’re working with a trusted lender. Moreover, read reviews or ask family or friends who have used the services of the same lender. 

Sources: 

• ^[1] P155 Million Lost to Over 8,000 Online Scams from January - August 2023 (Inquirer, 2023)
• ^[2] OFWs Warned Vs Criminal Online Lending Group Thriving on Social Media Platforms (Inquirer, 2023)
• ^[3] DepEd warns teachers vs. 'Labas casa' car loan scam (Philippine News Agency, 2023)
• ^[4] SEC’s List of Lending Companies
• ^[5] SEC’s List of Revoked and Suspended Lending Companies