Don’t Get Fooled Get Schooled:
All About Loan Scams
All together, consumers lost a staggering 8.8 billion dollars to fraud in 2022 according to the Federal Commission (FTC)1. Scammers love finding ways to con folks in order to get their personal information or money. But these fraudsters are by no means invincible, particularly when it comes to loan scams. In fact, there are several dead giveaways that will tell you if a loan is a fake and the company offering it shouldn’t be trusted. Let’s take a minute to learn about those telltale scam signs so that you’ll be better prepared if you encounter them in the future.
1. Approval Is in the Bag
Instant approval without an evaluation of your financial situation is a sign of a scam. If a lender insists they don’t need to know your credit score or economic history, they’re not really invested in you. However, a reputable lender like Heights Finance will check your credit score and history before providing a pre-approved or guaranteed offer.
2. You’re Pressured to Act Now
A reputable lender won’t pressure you to sign a loan and will go over the terms and conditions fully. You’ll have ample time to shop around, look for other loans and make your decision.
If a lender is trying to persuade you to act immediately, they’re suspect. The lender might give you only a day or even hours to sign a loan, claiming that their offer will “expire” by that time. This means you won’t be fully informed about the loan’s terms and conditions … or whether it’s a scam.
3. The Lender Demands Payment Up Front
Scammers will ask for payment up front, claiming it’s for “collateral” or “fees” for things like paperwork and processing. Some fees may be valid, such as fees for your application, but those charges are all explained and deducted from your loan. The payments false lenders will ask for will be ambiguous at best.
4. There’s No Transparency About Fees
Even reputable loan companies may not post fees on their website, but they will always thoroughly discuss their fees during the application process.
On the other hand, scammers will go to great lengths to avoid talking about their fees, even if asked about them. Plus, scammers may have hidden fees which occur after a loan has been approved, which is a clear sign of fraud.
5. The Lender Asks for Unusual Forms of Payment
Prepaid debit cards, gift cards, or money transferred to an individual are all forms of payment that a reputable lender would NOT request. If your lender asks for any of these forms of payment, simply don’t do it. Additionally, your lender should not ask you to wire them money for your loan. It’s nearly impossible to get money back from a wire transfer, which is probably why this method is used by scammers.
6. The Lender Is Intrusive About Contacting You
While a loan company like Heights might send you friendly offers by mail every month or so, we won’t bombard you. We also won’t constantly call you on the phone or send people to your door to solicit your business. These all may be signs of a scam rather than legitimate inquiries.
The best way to check if they’re fake is to contact the loan company through their customer service line and ask. If the lender has no evidence of contacting you, it’s likely you’re dealing with scammers.
7. The Lender Doesn’t Have a Physical Address
Last but certainly not least, make sure the lender has an actual physical address. Check their website for an address and then call the lender to confirm that address. After that, plug the address into a mapping app to make sure it pulls up a real building, rather than a vacant lot. If it’s the latter, it’s probably a scam. Similarly, if the lender’s address is a P.O. box, they’re also likely a fraud.
Shop for Loans with Confidence
Now that you know about loan scams, you can shop for a reputable personal loan with confidence. Just remember to do your research and always give yourself plenty of time to consider the terms of a loan carefully. In doing so, you can avoid things like a payday loan scam. And you’ll be protecting yourself from fraudsters who want to get a hold of your personal information or hard-earned money.
1. Consumer Sentinel Network Data Book 2022, published by the Federal Trade Commission, February 2023