Scammers are constantly coming up with new ways to trick their victims into parting with money, and one of the newest ones seems to be the loan scam. Whether it’s through email or text messages, scammers are finding new ways to request personal information and financial details from unsuspecting people, particularly students who are drowning in student loan debt and may be looking for an easy way out. While it’s impossible to completely avoid being conned by these people, you can recognize loan scams more easily if you know what to look out for. Here are some tips on how you can recognize and avoid loan scams.
General guidelines on How To recognize and avoid Loan Scams
Always be skeptical of anyone who contacts you out of the blue with a guaranteed, no-strings-attached loan offer. Loan scammers often use spam emails that promise easy money for people who have poor credit or no credit history. These are typically fake offers from cyber criminals.
The following are some of the signs that indicate it might be a scam:
1) They claim to work with reputable banks/companies but there is no contact info on their website – A lot of companies post their information online so customers can find them easily. Any legitimate business will make sure their site has contact details such as a phone number, address, and hours of operation.
2) They request personal details – Scam artists will try to obtain your personal data such as social security numbers or financial information in order to steal your identity. It’s not uncommon for them to also pretend they’re talking to another person when you ask questions about the loan terms because they may not understand what you’re saying.
3) You don’t know how much the monthly payment would be or what type of loan it is – Some fraudsters may only show the monthly interest rate instead of specifying what type of loans they offer which means that you won’t know whether this would meet your needs or not.
4) You’re asked for money upfront – If you’re looking for a loan, don’t pay any money upfront. A real lender would never want you to fork over cash in advance before they could even review your application.
5) They claim that you can get a free credit report or appraisal – This is not true. Scammers will try to gain your trust by offering something for free but it’s a trick. Avoid giving out your personal info when you are unsure of who you are dealing with.
-If the lender asks for any money upfront. If the lender wants anything from you before approving you for a loan, it’s probably not on the up-and-up.
-If it sounds too good to be true. If you’re being promised an extremely low-interest rate or monthly payments that are significantly lower than those of similar loans, there’s probably something fishy about the offer.
-If you don’t understand what you’re signing up for. If you have doubts about whether you fully understand the terms and conditions of your agreement with the lender, don’t sign anything until you do.
-If they can’t answer your questions satisfactorily. A reputable company should be able to explain things in detail, so if they can’t do this during the initial conversation then they may not have your best interests in mind.
If you’re considering taking out a title loan, it’s important to understand your rights as well as the risks involved before agreeing to any terms. Keep in mind that title loans are usually high-interest loans with inflated fees that may come with additional conditions. Know that if you default on a title loan, there is no collateral for the lender to take back. That means if you don’t make timely payments, the lender could foreclose on your car or repossess it without notice.
Title loan fraudsters have become more and more common. The Federal Trade Commission (FTC) has seen an increase in reported incidents from 2009 to 2015, which doesn’t even account for unreported cases where borrowers have lost their cars after they took out a title loan. In fact, according to data from the FTC, 1 in 4 reports of fraud involve these types of auto title loans.
Installment loan fraudsters can pose as legitimate lenders or provide a link to a fake website. Scammers may contact you through email, phone, text message, in-person, or on social media sites such as Facebook or Twitter. They might use websites that look like they’re from well-known lenders but they might be fraudulent sites designed to steal your personal information. Don’t share any of your financial information with these people. Don’t give them any money upfront either. Beware of deals that seem too good to be true because they probably are!
Advance fee loans
Advance loan fraudsters will sometimes offer to lend you a small amount of money in the first instance, for example, £100. They will then request a fee upfront before agreeing to give you any money. Once the victim has agreed to this condition, they never hear from the fraudster again. The scammer can get away with this because they have already received their fee and so they do not need to provide the service they promised.