If you are dealing with massive debt and are having difficulty finding a loan when you need one, you may be tempted by some loans you find online. Any ad or website that will guarantee a loan, credit card approval or any other type of financial product without seeing your credit report, and an application, is likely a scam. Many people who have been turned down by banks for loans due to poor credit history often fall victim to this type of scam out of sheer desperation to find a loan. This is especially true if the lender requires an advance fee when applying for the loan product or the credit cards. These are known as advance-fee loan scams, and sadly are all to commonplace online these days.
Thankfully these scams are easy to spot, when you know what red flags to look for that is. Here are some red flags to look out for, if you see any of these red flags, run for the hills.
Lenders who do not care about your credit score or your credit history.
No lender in the world with the exception of a payday lender will not care about your credit history and credit score. If an advertisement states that bad credit is no problem, or that they do not care about your past credit mistakes, or that you deserve a loan no matter what, chances are very high, if not guaranteed a scam. Lenders lend money or provide financial services in order to make money, and lenders do not make money loaning money to borrowers who will never pay them back. That is the purpose of a credit report and your credit score, to let the lender know how responsible you are with your credit, and how likely it is that you will repay your debts. No legitimate lender in the world is ever going to just hand you over money without looking into your credit history.
Any lender that claims you have been approved for a loan, yet calls or emails you stating that they need you to pay a processing fee or any other type of fee before they disperse the funds to you is a clear sign to walk away. If you pay them this fee the only thing that will happen is you will be out of the money you forwarded to the “lender”. Fees to borrow money are commonplace, but the difference between a legitimate lender and a scam one is that the legitimate lenders fees will be paid back during repayment of the loan, never up front.
Lenders that claim they will not check your credit history.
This is also a huge red flag. You should walk away very quickly if one of these lenders claims they will not check your credit history, yet ask for personal information such as your social security number and banking information. Often times they will use that information to debit your bank account or steal your identity.
Loans by phone.
If a lender offers you a loan over the phone yet asks for an advance fee over the phone, before the funds from the loan are dispersed to you, it is illegal. It is illegal for lenders in the U.S to offer loans or credit cards over the phone then ask you to pay for the credit product before they have delivered it.
Address is a PO box
Legitimate lenders will always provide a physical address. If they give you a PO box for an address, this is a sure fire warning sign of a scam. Also make sure to check the addresses of any references that the lender provides to you. Always check the lenders address with a phone book or directory assistance to make sure that the address provided to you matches.
Not registered in your state.
All lenders and loan brokers are required by law to register in any state that they are doing business in. To verify that they are registered, simply call your state attorney general’s office and/or your state’s Department of Banking or Financial Regulation. This will help you by filtering out scam artists.
A lender who asks you to wire money or pay an individual directly
Real lenders will never ever ask you to make a payment to a specific person. True payments will be made directly to the financial institution that lent you the funds. Legitimate lenders also do not require you to use a wire transfer service, real lenders will take checks or debit your bank account.
One last piece of advice. Just because you see an ad in a legitimate place does not mean the ad itself is legitimate. Crooks will use any medium to reach you. Crooks also work hard to appear to be the real thing, so by all means do your homework before committing to any loan or financial product, you just may very well save yourself from heartache and financial ruin.