How to Avoid Loan Scams

Each day thousands of people with bad credit fall prey to a wide variety of scams that claim to be offering them a loan but really want to steal their money.

Scam artists know that desperate people are easy marks or victims. That’s why there are so many fraudsters who claim to be able to get a person a loan or a line of credit.

Fortunately; it’s fairly easy to spot most of these scams and avoid getting taken by them, if a person knows what to be on the look out for. Some of the most common bad credit loan scams are described here.

Advance Fee Scam

The most common loan scam is the advance fee or upfront fee loan scam. In this scam, the con artist asks a borrower to send in a fee so they can get a loan. The fraudsters pocket the fee and the loan is never made because it didn’t exist in the first place.

Never pay a fee to get a loan because no legitimate lender will charge an up fee for a loan. In a legitimate loan any fees are included in the amount paid off.

The crooks behind these rip offs often place ads in legitimate newspapers and websites. They sometimes disguise these advertisements as representing legitimate lending institutions. A good rule of thumb is never pay an advance fee for a loan no matter what lender asks for one.

Acceptance Letter Scam

A very popular loan scam is the fake acceptance letter which is often sent out as a fax or e-mail. This is a letter that says a person has been accepted for a loan but needs to pay a fee to get the loan. The letter is an attempt to get you to send in an advance fee that the conman will pocket. These “letters” maybe decorated with the logos of a legitimate lending institution.

Never respond to any of these letters and never pay the fee. If the letter comes from a legitimate lending institution call the institution directly and ask them about it. Don’t call any number on the letter; look the lender’s phone number up in the phone book or the internet, and call that.

Fishing Scam

The fishing scam is a variation on the acceptance letter that is after information rather than money. It’s called fishing because the crooks are fishing for information they need to steal from you.

It works like this; con artists send a letter usually an e-mail stating that they need your banking information or Social Security or driver’s license number so they can send a loan payment to you.

They want your bank account numbers so they can clean out your bank account not send you money. They want your identification numbers so that they can steal your identity.

Criminals might be able to use your Social Security or other numbers to open credit cards and borrow money in your name. This can make your bad credit far worse and your life very miserable.

Avoiding the Scams

The best way to avoid these scams is to never answer an unsolicited loan offer. Only answer a loan offer if its one you actually applied for. If you don’t recognize a loan offer or don’t remember applying for it; chances are, it’s a scam.