Several different types of loan scams exist that affect loans of all kinds. Whether you are taking out student loans, auto loans, mortgage loans, or taking on debt of any kind, be on the lookout for fraudulent loans. Some scams will steal your identity and money, while other illegal loans that are more difficult to detect use predatory loan tactics to cheat you out of money.
5 Things to Watch out for When Taking out a Loan
- Ignoring credit history: A lender that says, “we don’t care about your credit score,” or doesn’t disclose they will pull up your credit report before allowing you to borrow, is probably a loan scammer.
- Lender is not registered with the state: According to the Federal Trade Commission, lenders must register to do business in the state they are in. Checking the lender’s website should allow you to locate information connecting the lender to an official chartered bank. A lender that does not have this information on their website may be fraudulent. You can check with your state’s Attorney General’s office to make sure that a lender is not fake.
- Offerings that guarantee loan approval: According to the Federal Trade Commission, legitimate lenders will not guarantee that you will get a loan or claim that approval is likely before you even apply. These offerings often target people who cannot qualify for other kinds of legitimate loans.
- Offers over the phone: It is illegal for companies operating over the phone to promise you a loan and ask for payment before they give it to you. Asking for payment before a loan is applied for or approved is a scam.
- Requests to wire money: Lenders do not ask you to wire money to a specific individual for payments. Do not wire loan payments or send money orders. It is difficult to reclaim fraudulent wire transfers.
What If You Have Been Scammed?
- Contact your credit bureaus: First, you should contact the three major credit bureaus in the U.S., Equifax, Experian, and Transunion. Report the potential fraud and ask them to freeze your credit.
- Contact your bank: Call your bank and report the transaction as fraud. In many cases, the bank will be able to recognize the fraudulent transaction and reverse the payment.
- Contact the Consumer Financial Protection Bureau: This can be done on their website, and reporting the suspicious company will bring the government closer to being able to persecute them.
If you have lost money due to a loan scam, your money can be returned in many cases. The quicker you act, the better. Washington, D.C. bankruptcy attorney Kevin D. Judd can review your loans to make sure that your loan providers are following the law.