How to Identify Loan Scams: 4 Common Signs to Watch For

Sometimes, there comes a time when you’re in need of financial assistance. When you find yourself in a financial crisis, you may feel inclined to act fast. You go into panic mode because you have bills quickly piling up that you must pay for, but you don’t have the funds to do so. 

When you’re placed in this type of situation, it’s easy to be tricked by loan scams. You’re in a rush to get the funds you need, and you overlook a few red flags. This will only dig you into a deeper hole, however. 

If you’re looking for a reputable lender for your next loan, then you’ll want to know what common loan scams to be on the lookout for. Continue reading below for everything you need to know about protecting yourself when taking out a loan!

1. They Charge a Fee Upfront

If a lender asks for payment upfront, walk away. You shouldn’t need to pay any fees or charges upfront to take out a loan. You’re in need of funds, so why should anyone expect you to have money to borrow money. 

It doesn’t make sense, so don’t be fooled by this. Yes, there are fees for taking out a loan, but these fees should be rolled into the overall loan amount. Nothing should be paid upfront. 

2. There’s No Interest in Your Background

Not all lenders require a credit check. There are same-day loans that don’t look into your credit history, which is great for many borrowers. However, a loan company that doesn’t require a credit check will require some other information.

Even these lenders will need proof of a stable job, proof of income, proof of age, and so on. If a lender isn’t interested in any background information on you, then this should signal a red flag. They’re not interested in this proof, because all they actually want from you is your personal information to scam you. 

3. They Aren’t Registered in Your State

Lenders are required by the state to have a license in the state that they’re lending money in. Be sure to do some research on your lender before working with them. Even if they’re registered in other states, don’t borrow from them if they’re not registered in your state. 

This is a red flag because this means they’re lending illegally. If they’re willing to lend money to you illegally, then what other illegal things are they willing to do? 

4. They Offer Guaranteed Approval

No one can offer guaranteed approval. Even the lenders that don’t require a credit check require other qualifications to be met. If a lender is claiming to give guaranteed approval, then take this as a red flag. 

Your information needs to be verified before you can be approved, even if it’s a quick approval process. 

Don’t Let These Loan Scams Fool You!

There are several ways scammers can fool us with loans. Know these loan scams and don’t let a scammer fool you with them!

For other informative posts, be sure to check back with us daily!

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