It’s unfortunate, but there’s no shortage of scams out there when it comes to loans. Con artists know people may let their guard down when times get tough, and they’ll use this to get your personal info or your money.
How can you tell if a lender wants to scam you instead of help you? Look for these red flags.
1. They guarantee approval.
Although it may seem like they help people in need of financing, lenders are in the business to make money, not lose it. What would happen if a lender approved every single person who applied for a loan? They’d take on a ton of risk from people who probably can’t pay them back, which would put them out of business.
If you have no income, lack assets as collateral, and have zero or bad credit history, a reputable lender will probably reject you as a client. Since it’s unlikely that you’d be able to pay back the loan, you would present too much risk in this scenario as a borrower.
How could a lender guarantee approval then? First, they could do it by ensuring they remain profitable via huge fees or incredibly high interest rates. Or they could do it because they want to steal your data or money and aren’t interested in a legitimate loan at all.
In short, if a lender has no interest in knowing your finances and ability to pay, keep shopping around.
2. They require upfront fees.
Why would you pay money to someone who’s supposed to give you a loan? It doesn’t make much sense, but some lenders will request advance fees to process your application or perform some other related task.
What happens if you pay an upfront fee? They’ll keep asking for more fees, until you finally catch on that you’re being scammed.
If it’s a larger loan you’re looking at, such as to purchase a home, that may have a credit check or appraisal fee. Auto loans, personal loans, and other forms of smaller financing should never require a fee. If they do, avoid them.
3. They request payment via Western Union or wire.
Again, you shouldn’t have to pay anyone when you need a loan. Still, some lenders may insist you not only pay, but also do it via Western Union or wire.
Why would a lender request this method of payment? To make it easier to steal your money, unlike with a check or credit card that have safety measures in place to combat fraud.
4. They lack professionalism.
A bank may not be your best friend, but its employees will usually do their best to be as professional as possible. A fly-by-night lender, on the other hand, may give you bad vibes that something isn’t right.
Is their website filled with spelling errors? Do you get virus pop-ups on your web browser when visiting their site? If so, do not enter any of your personal data into their forms and avoid doing business with them.
Lastly, if you speak to one of their employees and they are abusive or pressuring you into the loan, take it as a sign to end all contact. If they pressure you that much now, it’s only a sign of things to come.
Section 8 Assist