If you’re strapped for cash, the offer of a personal loan may seem like just the break you need to hold you over, particularly if your credit is not so great. But be careful. Fraudsters use the frustration and desperation of those with cash and credit problems to trick them into sophisticated personal loan scams.
There are a handful of common personal loan scams to be aware of. Of course, there are some tell-tale signs that separate the scams from the real deal. Below is an overview of some common scams and some red flags that are a dead giveaway.
Scam #1 – Advance Fee Loans
This scam is all about trying to get people to pay an advance fee at the time of loan approval. The scenario goes something like this: You see a compelling advertisement that guarantees loan approvals for good or bad credit.
Motivated by the ad, you submit the requested loan information and supporting documents as part of your loan application. A few hours or days later, a friendly and polite telephone caller responds with the good news. The loan has been approved, but an insurance fee, processing fee or three months advance payment is needed before the loan is released and the check delivered. You’re asked to pay the fee immediately through electronic transfer of the money.
