While people with poor credit already have a hard time navigating the financial world, advance-fee loan scams can turn that challenge into a trap.
Criminals look for people they think will be easy targets. Those who have need, or even desperation, are prime candidates for scammers. People in dire straits seek solutions, and can be more willing to try something risky.
This is especially true when it comes to acquiring credit.
Getting a loan can be a huge headache — if not impossible — when you have poor credit. Scammers know this and have devised various forms of entrapment with that in mind. Advance-fee loan scams are just one example of this.
Advance-fee loan scams entice people with bad credit into signing up for a “guaranteed” loan. The catch is the consumer has to pay a fee upfront, often billed as administrative expenses for the company.
Here are some of the warning signs of an advance-fee loan scam:
The Lender Says You’re Guaranteed to Qualify
If you ever hear these words from a lender, turn around and walk away. Consider the situation from the lending perspective. If you were going to give someone money, wouldn’t you want to have some idea as to whether or not they were going to pay it back to you?
Legitimate lenders are going to want to take a look at your credit. Those who don’t care about this step are almost certainly trying to take advantage of you in one way or another.
People who are at-risk of falling victim to such deceptive practices should consider potential paths to getting out of debt, and hopefully repairing their credit over time. A credit card consolidation is one way to potentially do just this. Whether you work with an agency like Freedom Debt Relief to get debt help, reducing your debt can help you avoid fraudulent loan offers.
The Lender Is Shady about Fees
This is where the “advance-fee” aspect comes into play. In a normal loan scenario, a lender might levy s fees on when you take out a loan — such as an application fee. However, legitimate lenders are upfront about this, especially if you ask for greater explanation. Furthermore, it’s typically taken from the loan itself, and not until after you’ve actually been approved for the loan.
Scammers, on the other hand, will be as sneaky as possible with fees. They’ll say you need to pay for various administrative functions before they can process anything. That’s a good sign the person you’re dealing with is just trying to take your money.
The Loan is Set Up Over the Phone
It’s not legal for legitimate companies to guarantee or ask for payments for a loan over the phone without having followed through with their end of the deal. It’s critical that you don’t surrender any key information to someone over the phone, such as Social Security or bank account numbers.
Anything Seems Off about the Lender
Listen to your Spidey sense when it tingles. If something seems off about a lender, just walk away. It’s not worth falling victim to fraud. Are they asking you to wire money to a suspicious place? Is their name too similar to the name of another organization?
Red flags like this need to be taken seriously.
There are lots of ways scammers will try to take advantage of you. This is especially true if you’re going through hardship, as it’s much easier to defraud people when they’re in desperation. Be sure to look out for these signs of advance-fee scams if you’re having trouble getting a loan due to poor credit.