Loan Scams And How To Avoid Them

Do you know what's worse than taking out a big loan? Taking out a big loan from a lending institution that's scamming you, that's what. It's bad enough that you're borrowing money in the first place; never mind being in debt to someone who's determined to hose you any way they can.

Here's how to spot a loan scam, and what you can about them.


"Have I got a loan for you! No need to read the fine print, trust me!"

Up-Front Fees
Not to be confused with a down payment that you make on a car loan or home mortgage, these are fees that an unscrupulous lender charges you, while promising that you are guaranteed a loan, regardless of your credit history. Sometimes it's even an annual fee, so the institution is hosing you every year of your loan!

For the record, it's illegal for a lender to charge up-front fees in advance of any attempt to modify, reinstate, or refinance your mortgage.

Naturally, many borrowers are unaware of many of these fees and conditions because the scammers are ...

Concealing Crucial Information In A Mess Of Fine Print
If the lender tries to gloss over the conditions or discourage you from reading all of the terms, brushing them off a "just the usual boilerplate", then the alarms should be going off in your head. References to the aforementioned up-front fees, as well as other hidden costs and special conditions, need to be included somewhere on the document, so these sleazy lenders cram it all in tiny print and shunt it into a hard to notice place on the paperwork.

The problem is, if you sign that document, you're stuck. You can't use the excuse of not reading the document in its entirety. If the paperwork is so excessive that it can be easily confused for the collected books in the Game of Thrones series, then something's up.

Requests For Your Personal Information
If the lender requests your personal information over the phone or via online, stop right there. Personal information, such as Social Security numbers, bank account or credit card numbers, even birthdates and home address, should never be released to anyone unless you have written documentation in your hands that explains the terms and conditions of the loan.

It may not hurt to check with resources such as the Better Business Bureau, the Federal Trade Commission, or even the state Attorney General is the company seems shady and secretive. And speaking of shady, another dead giveaway is ...

High-Pressure Manipulation
This includes companies that insist that you sign over your property to them, pay them instead of your mortgage holder, or make a decision "right now" (because the offer is only good for so long and won't be repeated!). Back away fast. Any lender that's strong-arming you into jumping into a loan without you doing the research, especially when it comes to something like a mortgage, is not acting with your best interests at heart.

These people know just the right things to say in order to frighten people into accepting their larcenous terms. Especially effective are the horror stories about mortgage foreclosures. The simple fact of the matter is that most respectable lending institutions will work with you if you're having difficulties making your mortgage payments. Failing this, there are government programs in place that can help. At the very least, these programs can steer you towards legitimate resources to help you with your debt burden.

Wrapping It Up
Not every lender is a crook, and even your original creditors are usually easy to work with as long as you're up-front about your current financial difficulties, and you express a willingness and desire to meet your obligations.

Just make sure that you're being told the whole story, you're not being hurried into it, and that the lender has good business standing. For more information about loan scams, check out "4 Red Flags That a Loan Company Is Scamming You" and get even more savvy!