When you need the money and have a poor credit score, it’s easy to accept any offer for a personal loan. But there are scam artists waiting to take advantage of that situation. They may offer loans via online website advertisements.
In this article, we would be discussing some of the warning signs that are usually experienced by victims of loan scams.
How can I identify loan scams and fraudsters?
Here are some of the easiest ways to know there’s something fishy going on:
1. No Interest in Your Credit History
Legitimate lenders evaluate a person’s creditworthiness BEFORE making a loan. Never listen to claims like “Bad credit? No credit? No problem!’’, else you’d fall for loan scams. There’s definitely a problem. It’s YOUR problem. A credible lender always has ties with the credit bureau.
2. Phone Offer
It is illegal to make loan offers over the phone. Any offer must be put in writing. It must prominently mention all associated fees.
3. Upfront Fees
The lender may disguise these as application or document fees, but they aren’t. Think about this: You are asked to send money before you get a loan. That’s a scam. A loan scam. Legitimate lenders must disclose all their fees. Typically, they are rolled into the cost of the loan, not paid for in advance.
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4. Wire Transfers
If the lender demands you to wire money for fees, that’s a red flag. Never wire money to an individual. Always ask for the lender’s physical address. Then reach out to the Attorney General or Financial Regulations office in the state to verify if it’s a legal business or a loan scam.
5. Copycat Name
In an attempt to appear legitimate, clever loan scam artists will come up with a business name or website that looks or sounds genuine. It’s always advisable to check with the Better Business Bureau to authenticate the address and phone number. If the mailing address appears as a Post Office Box, please be cautious.
6. Personal Information
Never give out your social security number, date of birth, bank account number or other important personal information unless you are certain you’re dealing with a responsible lending institution. Loan scammers can use your personal information for identity theft or steal from your bank account. Today, there are banks that even offer loans without collateral and much information.
7. State Registration
Lenders and loan brokers are to register in the states where they do business. You can check through the Attorney General’s office Financial Regulation or Department of Banking in your state. That won’t guarantee the perfect experience with the lender, but it can help spot a loan scam.
8. Customer Service
Reputable lenders have phone numbers you can call. If you aren’t comfortable with customer service, you shouldn’t give the company your business. Don’t settle for the phone robots, either. You should be able to speak with a person.
9. Reviews
Online reviews are now influential. They can also help you pick a reputable lender. You can Google the outfit or person’s name, while you check Facebook, the Better Business Bureau or other sites that specialize in lending reviews. If there are bad reviews, take note. If there’s consistency across several locations, with everyone forming an unfavourable impression, that is a warning.
10. Red Flags
There are several things that should prompt immediate concern. Be suspicious of email messages contain errors in spelling, capitalization, punctuation and/or grammar. That’s a lack of professionalism. Be wary if you get a free period (like a year with no payments) before the loan must be repaid. Definitely beware if the lender says they don’t use credit checks and will lend money regardless of past financial problems.
Read also: Why Federal Government shutdown online loan companies.
Conclusion
The amount of loan scams seems to be increasing by the day, with many falling victims. If you’ve been the victim of a loan scam or personal loan fraud, contact your local law enforcement as soon as possible.
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