Each year, thousands of borrowers in the United States fall prey to scammers and unscrupulous lenders. Many people, particularly those with bad credit search the market for subprime loans, only to be ripped-off with excessive fees or become victims of loan scams.
A predatory lender may use deceiving tactics to convince a borrower to sign up for a loan without realizing the consequences. Many lenders attract borrowers by promising instant approval regardless of their credit standing.
Indeed, bad credit loan advertisements can be misleading. Some borrowers might be easily enticed by the promise of a low interest rate despite having bad credit. Apparently, the real interest rate of the loan and the fees are yet to be revealed after the borrower signs up the contract.
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If you are in need of a loan, check your personal credit report to know your exact credit status. If you have poor score, you can find a legitimate lender that offers bad credit personal loans but you need to be extremely careful in comparing deals and in making a choice.
What are the common tactics that scammers and predatory lenders use to victimize borrowers? Being aware of these tactics will enable you to avoid bad credit loan scams. Listed below are signs of a possible bad credit loan scam:
Upfront payment is required. Are you being asked to submit an upfront payment before your loan gets approved? If yes, then this is a major red flag that you could be dealing with a predatory lender. Sometimes, the upfront fee may be called by other terms such as insurance fee, security fee, processing fee, etc. IT's important to remember that the Federal Law prohibits lending companies from demanding upfront payment in exchange for quick loan approval. Even if you have bad credit, you should not be required to pay any upfront fee.
No credit check required. Are you promised with instant approval the moment you submit your loan application? Does the lender boasts of not conducting credit checks at all? If yes, then you should look for a different lender. Legitimate lending companies will always do a credit check, even lenders that offer bad credit loans. In fact, the rate of interest you will be given will largely depend on your credit score. Yes, bad credit loan lenders will approve your application despite having a low score, but credit inquiry will still be made prior to approval.
Your personal information is required for a free quote. Many lending companies offer free loan quotes. You can request for the quotation by calling the customer hotline or straight from the lending company's website. Nevertheless, borrowers should never be required to give their Social Security Number, license number, bank account details, and other personal information to get a quote. These details are not necessary to get an estimate of your monthly loan fees. Identity thieves will use your personal information to commit fraud against you.
The company is not listed with BBB. It is worth the effort to check the lending company's track record of service from the BBB (Better Business Bureau). All legal businesses in the United States are included in the BBB's listing. Furthermore, you should be able to check previous complaints or cases filed against a particular lending company, if there is any.
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