Upfront Fees: A Scam To Watch Out For

One scam which people with bad credit often fall victim to is the upfront fee. An upfront fee is a fee that person pays to a lender to get their loan application considered.

An upfront fee is usually a scam because there is no guarantee that the person or business will actually get the loan. The lender has no incentive to try and approve the loan because they already have the upfront fee.

Nobody who applies should ever pay an upfront fee no matter how reasonable it seems. A legitimate lender will process a loan application without a fee.

Online Upfront Fees: A Real Rip Off

An even bigger rip off is the upfront fees that are charged by some online lenders. These are an even worse scam than normal upfront fees.

When an online lender asks for an upfront fee there is a good possibility it may not even be a lender. The so called lender could easily be a con artist claiming to be a lender through a website or e-mail.

Be on the lookout for spam or junk e-mails from fraudsters claiming to be able to get you loans in exchange for an upfront fee. Never answer these e-mails because they may actually be from con artists in foreign countries like Nigeria.

One variation on this scam is that the con artist claims to be some sort of broker or expert who can get you a loan. The only thing this individual is interested in is the upfront fee, chances are you will never hear from them again once they get the upfront fee.

Upfront Fees and Identity Theft

An upfront fee could potentially cost you far more than the fee itself. You could be setting yourself up for identity theft and paying for the privilege.

If you send in an application with your tax identification or social security number, bank account and other information on it with the upfront fee. The crook behind the scam could then use that information to steal your identity.

They could set up a bank account or take out a credit card or mortgage in your name for example. Then use it to make money or sell your identity to other criminals.

You could end up on the hook for thousands of dollars in credit card and other charges made by the identity thief. The worst part of the scam is that you could have paid to get your identity stolen.

Be Careful at the Bank and Elsewhere

Always get suspicious when a banker or a representative of a lender asks for an upfront fee. That is a clear indication that you are dealing with some sort of scam.

If a person who claims to be a representative of a legitimate bank asks for an upfront fee you should get suspicious. That individual could be a scam artist impersonating a representative of the bank.

At a legitimate bank get suspicious of upfront fees because the bank employee may just be taking them and pocketing them. A variation on this scam is that a person will claim to be able to change the rules in your favor if you make a cash payment to them. If a bank or loan company employee asks for an upfront fee; especially in cash, ask to see the manager and report them.

Upfront fees are always a scam, no legitimate lender will ever charge you an upfront fee. Any fees they charge should be collected with the loan payments you make after you get the money.