Personal loans are a great way to generate revenue for a variety of needs. Such loans can be secured by banks, loan companies, private investors, and online lenders.
It is important to be aware of personal loan scams and how to avoid them. This type of scam was ranked #5 in the United States for the year 2015. On average, each person scammed lost $464.
As a result, the Federal government has been working hard to educate the public about such scams.
The advance fee personal loan scam is the most common method of taking your money and running. Most victims never report it to authorities because they are embarrassed that they fell for such a ruse.
Victims also feel angry. They obviously needed money or they wouldn’t have applied for a loan in the first place. They now have less money. Those who do report the scam are often frustrated because the perpetrators are very seldom caught and brought to justice.
It is important to report any such instant of advanced fee personal loan scam. If you don’t, you are further enabling the predator to victimize others.
Advanced fee personal loan scams work on those who are desperate for money, over trusting, uneducated, or have bad credit. More than half of advanced fee personal loan victims are under the age of 30.
The lender tells the applicant that they guarantee they can work with the situation, but that there is a loan processing fee involved. This fee can be a hundred dollars or more. With technology available now, it is not uncommon for operators of these scams to have websites and even 800 numbers to call.
They will send letters that look so official, you won’t give them a second thought.
The stories of those victimized by fee personal loan scams will break your heart. One woman had been laid off and was about to be evicted. She found another job and applied for a personal loan to get caught up on rent www.the930.org. She paid the lender almost her entire first paycheck for so called processing fees on this loan.
She was understandably upset upon eviction after finding out she had been duped.
To protect yourself from falling victim to scams, be careful who you attempt to borrow from. Make sure they are a reputable company. Make sure you enter their business name exactly as listed. A well known practice of this scam is to use a name very similar to an actual reputable lending institution that applicants may already be familiar.
For anyone with bad credit or no credit, don’t believe something that sounds too good to be true. You may have to pay a higher interest rate, but you should never have to pay any upfront advance fees in order to apply for a loan, or have it issued.
Some personal loan scams will call the fees a first month payment, or a high risk deposit. Applicants need to be aware that no such things exist. As a matter of fact, any lender must grant access to the funds for minimum of seven days before they can collect a first payment.
You can check the legitimacy of any fees, charged by a financial institution, with the Federal Trade Commission. If facing financial difficulties, look for advice from a reputable non-profit credit counseling service rather than a lender.