Personal loan for people with bad credit are prone to scams that you must watch out for, especially if you are looking to borrow money immediately online. There are many warning signs that are often ignored by victims, which allows the scammer access to your personal bank accounts and can raise even more issues with your bad credit rating. If you need to borrow money today, but you know you have a poor history, it’s not going to be easy. In fact, it will be almost impossible. Still, if you are going to look around, you need to use caution and pay attention to what’s going on.
Signs of Bad Credit Personal Loan Scams
You need to be very careful as you shop around, looking to borrow money. If you spot any of these signs, it doesn’t mean you have to assume it’s a scam, but it must be treated at least as a red flag that you must look into before you sign any contracts.
Regardless Of Credit History/No Credit Check: If you had a business of lending money to people, would you require a credit check? If not, how would you know they hadn’t taken out 15 loans in the last year, all in default? It’s a catchy slogan and many banks and online lenders use it as an advertising campaign, but very few actually deliver and will borrow you the funds without checking your history before approval. Now, you will find some lenders that are running very legitimate businesses using this slogan. There is, however, going to be a catch. At some point, you will have to submit to credit report history check for final approval.
Too Good To Be True: Do they offer ultra-competitive, same-day loans for anyone online? Will they wire you the money you need before the paperwork is complete? Are they willing to overlook your 500 score and give you a rate that only the best borrowers qualify to get? If you are finding any of these to be true, there’s a good chance you are falling prey to a scam. If you have a very low FICO score, the odds of getting approved are low, regardless of who you go through for a loan.
Offered By Phone: If you are approved by phone and don’t have to create any form of paper trail, it should serve as a red flag of a potential scam. Keep in mind, however, that preapproval by phone is an acceptable method that many lenders use. The difference in preapproval is that you don’t actually get the money and it’s not a guarantee. In essence, the lender is assuming all you are saying is true on the phone and will give you a personal loan, assuming it is all backed up contracts, credit checks, and things of that nature.
Ridiculous Fees/Security Deposits for Applying: Sometimes, the bad credit personal loan itself isn’t the scam; it’s the fees you have to pay upfront. Upfront payments are actually illegal. Many lenders and banks have lots and lots of hidden or understated fees. This by itself isn’t necessarily a scam, but the upfront fees that are required can be a chance for the scam ‘lender’ to get access to your bank accounts. Even if the scam is nothing more than getting your application fee from you and moving on to the next victim, it’s not going to help you out at all as you look for a legitimate bad credit personal loan for people with bad credit.
Copycat Company Names: Lending Tree, Fanie Mae, Quicken, and E-Loan all have names that many people immediately recognize. If you are checking out a company that has an eerily similar name to one of the big name borrowers, it should serve as a red flag of a potential scam. Now, this alone doesn’t mean the company isn’t legit, so you must check out the other warning signs of scams for personal loans for people with bad credit and look for patterns.
No Information Online: If you cannot find any reference to a company other than their own website, it should serve as an immediate red flag of a potential scam. This is a clear indication of a either a brand new company, which might be fine, or a site that was created to make a few quick bucks and then change their name again, so they can start all over.
Not Quite a Scam
There are some things that border on being an illegal scam, but are not. Interest rates can eclipse 300% on car title loans, believe it or not, and still be fully legal. Excessive fees and penalties can be added without the lender being a true scam artist, making it more expensive to borrow money. Pawn shops charge interest by the month at high rates, but it is perfectly legit. You’ll need collateral, they are not generally signature loans, but they are fully legal and are done without credit checks because of the collateral. If you need to borrow money quick, but you have really bad credit, you will have to pay high interest and fees, for the most part.
What If I Suspect a Scam?
The first thing you need to do, if you feel you might be getting scammed, is stop the process. Do not give any further information to the lender and do some investigating. To start, you might want to check with the FTC. You can call them by phone, which is probably going to be your best bet, at (877) FTC-HELP.
In addition to working with the FTC, you will want to research the company thoroughly. You might find many people have been scammed by the same company. One thing, however, to keep in mind is that you will find many people claiming to have been scammed by legitimate companies, even if they were not. You have to look for patterns, not single incidents.
Now that you know a little more about what to look for, don’t fall prey to personal loans for people with bad credit scams.