In a bad credit loan scams, the "lender" often promises to send you a loan, but only after you have first sent a fee to obtain the loan.
They can be as low as $ 50 or up to a thousand dollars, depending on the amount you're borrowing. The "lender" can be a loan origination fee, loan insurance costs, or even security for the loan. You send the money and wait for your bad credit loan, but you never receive it. Unfortunately, by the time you realize what is happening, your money is gone and the money lender is nowhere to be found.It is against the law that a company promises to borrow money in exchange for a fee - this is called "advance payments". Not only do legitimate lenders require no payment to lend you a bad credit loan, but it does not make sense financially to pay money to borrow money.
Signs of a bad credit loan scam
The most obvious sign a bad credit loan is a scam is an application for prepayment. (Note that with mortgage or car loan there is a mortgage on mortgage or car loan or closing costs.)Advance payment and other bad credit loan scams usually guarantee that you get a loan, even before they have checked your credit. They promise to give you a bad credit loan, regardless of your credit history, income or bankruptcy. But no legitimate lender will give you a loan without a certainty that you will repay the loan.
One sign that you are going to a scammer is that the company asks / requires that you prepay in some ways in addition to US mail and send a personal check. Because there are strict e-mail fraud laws in the United States, scammers usually do not receive payments via e-mail. Instead, they often request that you make the payment to them. Scammers are asking more and more victims to send money via Green Money MoneyPak, which is another method that can hardly be detected once the funds have been sent.
Be careful with credit providers abroad, such as Canada or the Caribbean. These are the two most common places that appear to be bad credit loan scams. Just because the loan comes from somewhere other than those two places does not mean that it is legitimate. Compare the loan carefully with the other criteria to verify the bad credit loan.
Beware of companies that claim your social security number, bank account number or credit card number without giving you written documentation about the loan. Avoid giving sensitive information on the phone unless you have started the call to a company that you know and trust.
If you are hurt
If you are the victim of a bad credit loan scam, contact your local law enforcement as soon as possible.
You must also notify your Attorney General, the FBI, if the company was from another state or country, and the Federal Trade Commission. It is also a good idea to let the Better Business Bureau know about the scam to warn other consumers about the fall.