Loan Scams to Avoid

In this day and age, falling victim to scams is a common occurrence. But that doesn’t meant it has to happen to you. If one is well educated and aware about the signs that something is a scam, then it becomes easier to prevent being taken advantage of.

Things to be aware of

There are several red flags when it comes to scams in loan advertisements. The most common is when a company asks for an upfront payment, or one before they begin any work for you. This will most often mean the advertisement is fake.

Beware of companies that ask for money in advance. The company may just take your money without actually assisting in getting you a loan. The same goes for when they ask you to give them the money you send to your mortgage company. They may take the money, and again, not actually help you.

Never buy into companies that ask you to sign paperwork without allowing you time to properly read and look over the terms. Pressuring a client is never something a legitimate company would do. Also beware of guarantees- if an advertisement claims it can guarantee you success, it is most probably a scam.

Check the organizations that a company claims to be affiliated with before believing them. Claiming to be backed by another organization to achieve legitimacy may be a lie. Take care to not reveal any personal information that could let the company take advantage of you—this goes for any company before you are 100 percent sure of their legitimacy.

Companies that don’t give out their location or address of work are most likely not real.

Common scams 

Some common scams are seen under the following titles:

1. Loan modification

These scammers will claim to negotiate for you, but will ask for a fee in advance. They may take the advance fee and never actually help you.

2. Automobile loans

This scam will charge a large rate for loans, and will be caught in a web of debt through high interest rates.

3. Government programs

Scammers often claim to be supported or approved by the government. Make sure the company’s website ends in “.gov”, the appropriate government affiliated website ending. Do your research if you aren’t sure that the company is legitimate. 

4. Loan audits

Scammers in this situation will review your mortgage documents for a fee, give you a loan audit, and most of the time, it will not end up helping. The general rule of thumb is to always avoid companies that require upfront payments, as it usually will not lead to anything.

Finding a legitimate lender

Look for companies that are low pressure, avoid certain questions or concerns, or ask for your signature on documents that you haven’t thoroughly read and understood. Always research a lender before hiring them, and make sure they are completely trustworthy. It isn’t possible to be too careful when it comes to investing your money, especially when you are financially unstable. Always check before you begin anything that was solicited through phone or email, especially if it is vague in any way.