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Personal Loan Scam

Many people who seek personal loans end up falling variety to a wide variety of scams. Con artists target people who desperately need money because they know that desperate people are easy victims for their scams.

Personal loan scams are con games designed to rip off people who need emergency financing. Since many of these individuals are low income people with bad credit ratings they can’t turn to traditional lenders such as banks. Some of these people are not familiar with lending and finance which makes them easier marks for personal loan scams.

Always be on the lookout for personal loan scams when you are seeking a personal loan because the average person can usually spot personal loan scams and avoid them. Nobody who is on guard needs to fall victim to a personal loan scam.

Signs of a Personal Loan Scam

The first sign of a personal loan scam is a very obvious one that almost anybody should be able to spot. The loan or the deal the lender is offering on the loan seems too good to be true.

If the loan comes with fantastically low interest or very good terms there is a good chance it is a personal loan scam. Always remember that personal loans usually come with very high interest rates and a strict repayment schedule. Any loan that doesn’t appear to meet these characteristics usually comes with some sort of catch.

Another sure fire sign of a personal scam is a lender who tells you that other lenders are out to cheat you. This lender is trying to dissuade you from going elsewhere in order to get your business.

Finally, never do business with a lender that doesn’t tell you all the details of the loan upfront and doesn’t let you read the loan contract. If the lender is trying to hide the details there is usually something wrong with the loan. An example of this would be a clause in the loan agreement that raises your interest or charges you with a “fee” if you don’t make a payment on a certain date.

Changing Terms Personal Loan Scam

Many personal loan scams offer a borrower a low interest rate and easy terms at first. The scam is that the loan contract enables the lender to raise the interest rate and charge high fees at some point.

This can double or triple the cost of the loan. This loan scam can be avoided by simply reading the contract before taking out the loan.

Never do business with a lender that doesn’t’ let you read the contract or tries to discourage you from reading the contract. Such a lender is probably trying to keep from seeing something.

Loan Broker or Fee Scam

Another common personal loan scam is for a con artist to pose as a broker or expert who can find you a good deal on a loan if you pay a fee upfront. Such an individual is only interested in collecting a fee from you and not helping you find a loan.

Legitimate lenders will not charge you a fee to take out a loan. They make their money by charging interest and fees on loans and will collect when you pay off the loan. There is no reason for a lender to collect a fee before issuing a loan.

Any sort of fee collected before a loan is taken out is usually a scam. Most borrowers should be able to locate personal loans on their own by using the internet.

Identify Theft Personal Loan Scam

Finally there are criminals who simply want to get your bank account and other information in order to steal your money or your identity. These crooks will sometimes pose as lenders to get your bank account and personal loan information.

Never give a lender your bank account information or Social Security information until you have verified that they are legitimate. This can help you avoid this scam which is known as fishing. In particular watch out for unsolicited loan offers that come in texts or e-mails these can actually come from criminals looking for your information.