Scams Made Easy

 Need a loan?

• Less than perfect credit?
• No credit?
• Bankruptcy?
• No problem! Generic lending company can help you get approved for a loan right now!

We have all heard the commercials or even seen them in the Internet. Some company offering a loan to help you meet your needs regardless of your credit qualifications. Unfortunately, these offers are often scams or loans that leave consumers worse off financially than they were when they started.

Here are some more warning signs that a lender you are considering is actually operating a scam.

1. The guarantee. A legitimate company will not guarantee they can provide you a loan, “regardless of your credit.” Loans made without accessing your credit report will, most likely, have numerous fees and high interest rates.  You will pay a lot more for the “privilege” of getting a loan regardless of your credit history.
2. Fees. We mentioned fees above. It is a good practice to ask lenders about their fees. A good lender is clear and upfront about their fees. In a typical loan, fees are deducted from the amount you borrow and paid to the lender when the loan closes.  Other lenders may require you pay them upfront in exchange for the loan. This type of agreement is usually a scam.
3. Another indicator a lender is not practicing ethically is if they offer loans over the phone, and then ask you to pay for the loan before it comes through. According to the Federal Trade Commission, this type of lending practice is illegal.[1]
4. Wiring money. A particularly distressing scam is one where an individual is offered money in exchange for cashing a check and wiring money back to someone else. The check is not legitimate and unfortunately, the consumer who cashes the check is often confronted with repaying the funds or faces potential prosecution.

So what are some ways to protect yourself from these scams? Always take the time to determine if the lender you are dealing with is licensed in your state. Start by visiting your State Attorney General’s office. If they do not have this type of information, they will know what agency in your state does.  Being licensed does not mean the lender is wonderful, but it is a way of determining whether they are trying to obey the laws of your state.

Also, if someone offers you cash in exchange for cashing a check, walk away. This is definitely a scam. And remember, you should not have to pay money in advance in order to receive a loan.

If you are unsure whether a lender is legitimate, ask a friend or family member to look over paperwork with you. You can also shop around for the best loan available. If one lender believes you are loan worthy, then chances are, someone else will too.

For more information on how to recognize loan and financial scams, and for other options on how to manage your finances, call and speak to a certified credit counselor. They are available Monday through Friday, 6:00 a.m. to 7:00 p.m. PST at 1(888)282-5492.

[1] http://www.ftc.gov/bcp/edu/pubs/consumer/telemarketing/tel16.shtm

Published Jun 28, 2010.