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Watch Out for Personal Loan Scams

[Dec 16, 2008.]


Banks have gotten very strict with who they will extend personal loans to, so be wary of lenders who make outrageous claims about loan products. Scammers are working overtime to take advantage of desperate people looking for a way to solve their financial problems.

Many of these scammers target people through emails. They may offer mortgage refinancing, personal loans for people with bad credit, debt consolidation, or small business loans. Some common signs of loan scams are:

—Advance fee loans that require applicants to pay fees upfront to obtain funds. Some scam artist even use fake Web sites and online loan applications to appear legitimate.

—Claims that being approved for a personal loan are guaranteed—even for people with bad credit. In reality getting approved for a personal loan depends upon credit scores, income, credit history, and debt levels. And in today's tough lending environment, most people with bad credit aren't being approved for any credit.

—Lenders and loan processors are located outside the U.S.

—Loan applicants are told to wire fees through a retail wire transfer system.

—Asking applicants to falsify information on loan applications.

The best way to guard against being the victim of a loan scam is to ignore solicitations from unknown individuals via email, phone, or mail. The credit crunch has made it difficult to obtain personal loans, so be skeptical of anyone who claims that anyone can get money just by filling out an application. Such solicitations could be aimed at bilking consumers out of money or obtaining personal information to steal their identities.

Anyone who has been a victim of a loan scam should contact their local police department and file a report with the Federal Trade Commission. 



About Author:

Francine L. Huff is a freelance journalist and the author of The 25-Day Money Makeover for Women. She has appeared on a variety of TV and radio shows.

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