Q:

Is it safe to apply for a personal loan online?

A:

Quick Answer

While giving out personal financial information online always carries risks, applying for a personal loan online increases the risk of exposing personal information because many websites are not actually lenders but are lead generators, reports the Consumer Financial Protection Bureau. Lead generators identify potential clients for lenders, gather information and send it to a network of lenders, acting as a third party in the process.

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Is it safe to apply for a personal loan online?
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Full Answer

In addition to the risk of personal financial information being exposed to an unknowable amount of lenders, applying for a personal loan online through a lead generator also rarely generates the lowest interest rates and causes confusion between the consumer and the lender, cautions the CFPB. Keys to differentiating between actual lenders and lead generators online are often in the fine print. Phrases such as "matching you with lenders" are red flags.

Lead generators are also known to resell personal data, exposing personal information outside of the network of potential lenders. For example, a reporter for NPR submitted a false application through a lead generator to discover how far the information spread and how quickly. Although she submitted a fake name, address, social security number and bank account information, she was approved for a loan and received calls from companies for months afterward with offers of funds up to 10 times of what she originally requested, reported Pam Fessler for NPR.

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