One of the consequences of having bad credit is that it is hard to borrow money. Lenders perceive you as a risky borrower who is likely to default on loan terms, so many will deny your application. Due to this, borrowers with bad credit are often targeted by companies who offer bad credit loans. Unfortunately, these loans are often scams intended to trick you into giving some funds.
In a bad credit loan scam, the lender often promises to send you personal loans online, but only after you first send a fee to obtain the loan. They may be as low as $50 or up to several thousand dollars depending on the amount you are borrowing. The lender might call it loan origination fee, loan insurance fee or collateral for the loan. You send the money and wait for your bad credit loan, but never receive it. Unfortunately, by the time you realize what going on, your money long is gone and the lender is nowhere to found.
So how to trace the sign of a bad credit loan scam? In this article, we will discuss this matter in great detail.
- Request for upfront payment
The most obvious sign of a bad credit loan is a request for upfront payment. Note that with a mortgage or car loan there will be a downpayment on a mortgage or car loan or closing cost. This cost goes to the seller and reduced the amount you have to borrow, Advance fee and other bad credit scams typically guarantee you will receive the loan, even before they have checked your credit score.
- Different mode of payment
Another sign of loan scam is being asked to send upfront payment via a method other than mail, credit or personal check. Because there are strict mail fraud laws in various countries, scammers don’t usually receive payments through the mail.
- Asking for a personal account pin number
Beware of those companies requesting your social security number, bank account number or credit card number without providing you with any written documentation on the loans. Avoid giving sensitive data over phones unless you initiated the calls to the business you know and trust. If you have been scammed already, contact your local law enforcement as soon as possible. You should also notify your Attorney General if the company was from another state or country. It is a good idea to let the Better Business Bureau know about the scam to alert other consumers about the trap. Check out here to know more red flags to easy spot personal loans scams in great detail.