Many people with a bad credit history and still want to secure a loan are prone to fraudsters who have created the online loan scam. Amid the confusion of not having enough money and sometimes dealing with the loss of a job, many people will fall for the trap. But how does it work? A company with a legitimate-sounding name offers a guaranteed loan without paying regard to the client’s credit history. When you see this, it’s time to raise an eyebrow and look out for other signs of detecting financial scams online. These are:
Upfront or Advance Fees for a Loan
The company will ask for an advance fee. The fee will be disguised as registration, premium or even collateral. The amount can total up to thousands of US dollars. The fraudsters are very crafty since they know when they ask for it immediately you will decline, they wait until one or two days for your loan to be approved. You will then receive a phone call informing you that your loan has been approved and that you are required to send the fee.
Personal Information
It’s not smart to send personal information online when you’re not absolutely sure you’re dealing with a reputable lender. Just like the upfront fee, a person will be very excited to send their personal information such as bank details, social security number, date of birth and other personalized details. This information could be used to rob your account or to commit identity theft.
A Lender Not Interested in Your Credit History
Lenders will often dig into your credit history to determine your probability of repaying the loan. Therefore, don’t believe that a company will offer you a loan without checking into your credit history. If this happens, it’s a scam. Some of the scam ads will read like: “We do not care about your credit history,” “No hassles, just make a call, and you will have your loan in three days.”
Pressure to Act Immediately and Fast
Normally, a loan will take a few weeks to be approved. This allows the bank to gather all the information it required for approval. Fraudsters will want you to send an upfront fee, give personal information even before getting the paperwork. Always insist on paperwork before deciding on the line of credit or type of loan you want to apply for.
If the Loan Broker Hesitates to Tell Their Location
Loan brokers are licensed to operate on behalf of banks and lending institutions. Fraudsters will approach you offering to negotiate a loan for you with a reputable institution–but if they decline to tell you their location, run away from the scam.
A Company That Is Not Registered
Run a background check through the registrar of companies. If you find out that the lending institution is not registered in your state, you should know it is a scam. Although this is not a guarantee of detecting a scam, it will enable you to see the companies previous lending history and rating by clients. And give you a clearer outlook of the company.
Fishy Connections to a Financial Institution
A broker will want to act on behalf of a renowned lending company to look legitimate. Ask which lender the broker is connected to and the address of the establishment. Fraudsters have mastered the art of craftiness and will provide paperwork that is similar to the renowned lending institution. Run a cross check of the website information of the lender to determine whether it’s genuine.
When you have a bad credit history and need cash, you might fall prey to these con artists. Always remain skeptical about loan offers and look for all possible signs of a scam such as these listed above.
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