Advance fee loans
When you need money, a promise to give you a loan or help you get one (even if you have a bad credit record) may seem like the answer to your prayers. But beware—it could be a crook trying to steal your money, not lend you money.
Stay safe. Be Informed.
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Don’t pay upfront. If a lender approves your for a loan, then calls or emails you demanding a fee before you can receive the money, it is most likely a scam. Many of these scammers tell you the up-front fee is for “insurance,” “processing,” or “paperwork.” Normal lenders charge application, appraisal, or credit report fees but do not require you to pay up-front for the loan.
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Don’t trust a lender who contacts you by telephone. It is illegal for companies to promise you a loan in the U.S. by telephone and ask you to pay for it before they deliver the money.
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Don’t fall for promises that you’ll get a loan regardless of your credit problems. If you have poor credit or haven’t established a good credit record yet, it’s unlikely that any credible company will lend you money. Your credit history is one of the main things that legitimate lenders use to decide if you are a good credit risk. If a lender does not care about your credit record or guarantees you money no matter what your credit score may be, it is most likely a scam.
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Do business with licensed companies. Ask your state banking or finance department about the licensing requirements for lenders and loan brokers, and find out if the company has complied. Be wary of scammers who claim to be affiliated with well-known or respected organizations.
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If you can’t get a loan yourself, get a co-signer. A friend or relative may be willing to apply with you for a loan. You will both be equally responsible for the payments.
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Get all the costs and other details before you decide. Shop around for the best loan rates and fees.
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Have proof of what you were promised. Get the agreement in writing or in an electronic form that you can use to document the deal. Make sure you do not pay for the loan directly to an individual or wire anyone money, legitimate lenders will not request this from you.
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If you have credit problems, get counseling. Your local Consumer Credit Counseling Service (CCCS) can provide advice about how to build a good credit record. The CCCS may also be able to make payment plans with your creditors if you’ve fallen behind. These services are offered for free or at a very low cost. To find the nearest CCCS office, call toll-free, 800-388-2227, or go to www.nfcc.org.
