Takeaway: Never use untraceable payment methods, like a gift card, prepaid debit card, or cryptocurrency when dealing with a lender. You should accept a wire transfer, direct deposit, or a check you can deposit into your checking account.
If you get a loan offer by phone, through the mail or even through a door-to-door solicitation, be on your guard. According to the FTC, it’s illegal for companies to offer a loan in the U.S. over the phone and ask you to pay before they deliver.
Takeaway: A reputable lender will not target you over the phone, through direct mail or through door-to-door solicitation. Look for lenders that advertise through traditional online and mass media.
5. The lender has no physical address
Every lender you’re interested in should provide a physical location. Run it through Google Maps just in case. Some businesses running personal loan scams will list addresses that are actually vacant lots, so it’s important to verify this.
If you don’t find any sign of a physical address, avoid the lender. Many fraudulent businesses are untraceable so they can avoid legal consequences.
Takeaway: Don’t do business with a company that cannot provide a physical address, and always verify that the address is legitimate before you proceed.
6. The lender pressures you to act immediately
Don’t fall for the urgency plea. One of the halls is giving you an immediate deadline to sign on for a loan because the offer expires quickly – like within a day.
Lenders that use such high-pressure tactics could be up to no good. It may be a ploy to get you to make a rash decision.
Takeaway: Avoid offers with immediate deadlines for you to make a choice. You should have days and possibly weeks to accept a loan offer.
7. The lender is not transparent about its fees
Scammers will avoid posting their fees prominently on their websites or disclosing them when asked. They may also tell you that you’ve been approved for a loan and then demand a fee from you upfront.
Hidden fees that are imposed after loan approval are a red flag. The FTC suggests that you walk away from any company that follows this practice, particularly if you’re told that the up-front money is for such things as “processing,” “insurance” or “paperwork.”
Takeaway: Legitimate lenders may charge application, credit report or appraisal fees, which you’ll be aware of before you complete an application since real lenders make you aware of these fees. If there are surprise fees you weren’t aware of, it could be a scam.
Common https://paydayloansohio.net/cities/tiffin/ types of loan scams
Most types of loan scams seek to either extract money upfront or provide loan terms so unforgiving that borrowers will be subject to late fees or other charges. Some popular ones are:
- Loan fee scam: Scammers may try to offer you a low-cost loan in exchange for hundreds or thousands of dollars of fees upfront. After receiving these fees, they will cut off contact without providing any funds.
- No-credit-check scam: Some legitimate personal loan lenders consider more than your credit score when approving you for a loan, but some scammers promise funds without a credit check. This is a red flag since your credit history is a major factor in assessing how risky of a borrower you are.
- Private student loan forgiveness scam: The federal government offers student loan forgiveness programs for federal student loans. If a company approaches you promising to forgive your private student loans, it’s likely a scam.
- Debt consolidation scam:Debt consolidation can help you streamline the process of repaying your debt and can save you money in the long run. If a debt consolidation company is being pushy or tells you to cease contact with your creditors, chances are it’s trying to scam you.
Add a Comment