Financial scams are common among lenders who cater to those with bad credit

The number of Americans who have trouble making ends meet seems to grow every day. We carry more and more debt and have a harder time paying it off. Many people try to get out of debt by filing for bankruptcy, enrolling in credit counseling, or by taking out a debt consolidation loan, but the problem just seems to be getting worse.

Adding to the problem is the growing number of “lenders” who are taking advantage of people with problem debt and bad credit. There have been a number of cases in the news recently of people who have been ripped off by companies that promised to lend money to people with bad credit. These borrowers, many of whom wanted to use the money to consolidate their debt, applied for these loans in good faith. The companies claimed that they would lend money to “anyone”, and that they specialized in lending to people with damaged credit. When customers called to apply for the loans, they were told that they were approved, and all they needed to do in order to receive the funds was to submit payment for three months worth of payments in advance.

Those customers who did so never received the money and never heard from the “lender” again. These companies weren’t fly by night operations that were advertising on telephone poles; these were companies that actually had advertisements in the Yellow Pages, a source of advertising that consumers generally trust.

And yet, fraud of this type seems to be growing as fast as the debts the consumers want to use them for.

Here are some tips you should heed when seeking a loan, especially one that is unsecured:

• There is no such thing as a ‘guaranteed” loan. Beware of lenders that tell you that you cannot be turned down. No responsible lender is going to guarantee that you will qualify before they actually check your credit report or score.  Be even more suspicious if they ask you to pay a fee to apply for the loan. Merely applying should be free.
• Beware of lenders that want you to pay a fee in order to receive the funds. A loan is a loan; you should have to pay in order to receive the funds. Paying back on a fixed schedule is reasonable, but paying back before you have actually received the money is not.
• Many unscrupulous lenders will ask you to send money to them by wire transfer. This method of payment, such as through Western Union, is untraceable if something goes wrong. It’s a bad way to send money and a sure sign that something will go wrong.
• If you must borrow money, try to use a lender that can be honestly recommended by someone you know. That is much safer than just randomly grabbing a phone number from an advertisement.

It is unfortunate that there are so many people out there that want to steal your money. But that is exactly what they want to do, and you need to do your best to avoid becoming a victim. Before doing business with a lender, do a bit of research. It may save you a lot of heartache.

Copyright © 2005-2007 by Retro Marketing. All rights reserved.