Personal Loan Scams to Avoid

PERSONAL LOAN SCAMS

While in the market for a loan, there are several loan scams to be aware of. The majority of scams occur when a supposed lender requests a fee in advance in order for you to receive your total financing. After you remit this requested advance fee, the lender vanishes and you never receive your loan. Learn more about advance fee loan scams.

During times of desperation, it is very easy to become preoccupied from apparent signals of a scam. A rule of thumb to follow: If it is too good to be true, it is. Below are some of the common signs to look for to help avoid from falling victim to any type of scam.

'We are going to need a deposit.'
It is common for some actual loans from real lenders to require a deposit. This is why the deposit/advance fee requirement is the most common type of loan scam. If any lender asks for a deposit, make sure you not only ask questions like 'why?', 'when will I get my money', but also make sure this potential lender is legitimate by doing research online and checking with the BBB.

'Because of your bad credit history, we are going to need a pre-payment.'
Individuals with bad credit are frequently easy targets as a result of despair. In the event that you are unable to obtain a loan via traditional means (your bank, credit union, etc.) you may be effortlessly persuaded to pay extra for a loan. When you have bad credit, genuine lenders will impose higher interest rates. But they will not ask you for any sort of pre-payments. As mentioned above, they may ask for a deposit...which is different from a pre-pay.

'There is a fee you have to pay to apply.'
It is very likely that you will be required to pay an application fee even when applying with a legitimate lender. However, you will not be asked to pay this fee out of your pocket. Instead, legitimate lenders roll any sort of application fees into the total loan cost.

'Collateral is required.'
This angle of scamming is not limited to only people with bad credit. Cons may say that in order for you to get your cash, they need money from you as collateral. Any legitimate lender requesting collateral is not going to be asking for cash. Instead, they want you to put some sort of personal property up for securing your loan.

How to Avoid Loan Scams
Being on the lookout for the above scams will definitely help you avoid from becoming a victim. Below are a few more tips that will help you.

- Be on the lookout for companies utilizing names that are very similar to actual bank and lenders. If you have any concerns about the legitimacy of a potential lender, do some research before committing to use them as your source of financing.
- Any company offering an approval over the phone is illegitimate. It is illegal for any US company to grant loan approvals over the phone.
- Never wire any money (cashier's check or MoneyGram). You will be out of any money that you wire to any loan company, especially because this type of money is untraceable.
- Never accept a loan that does not require any type of credit approval as a part of their process. Every loan is going to necessitate either a soft or hard pull of your credit.

Related Reading:
Being a Wise Borrower
Unsecured Loan Tips
Compute Payments
Loan Shopping
Bad Credit Loan Information
Borrowing Advice for First Time Borrowers
Getting the Best Rates
Applying for Loans Online
When Refinancing a Loan Makes Sense
Advantages of Personal Loans
Are Unsecured Loans for Consolidating Debt a Good Idea?
Dangers of Debt Consolidation Loans
Cheap Personal Loans
Bad Credit Unsecured Personal Loans for Getting Rid of Bad Credit
Loan Aspects to Avoid
What Happens If I Default

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