is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range can also impact how and where products appear on this site. While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service.
Insurance Disclosure
This content is powered by , a licensed insurance producer (NPN: 8781838) and a corporate affiliate of . LLC services are only available in states were it is licensed and insurance coverage through may not be available in all states. All insurance products are governed by the terms in the applicable insurance policy, and all related decisions (such as approval for coverage, premiums, commissions and fees) and policy obligations are the sole responsibility of the underwriting insurer. The information on this site does not modify any insurance policy terms in any way.
Consumers lost nearly $3.3 billion collectively to fraudulent practices in 2020, according to the Federal Trade Commission. Potential fraudsters pounce on those who are most in need or the most likely to accept a fake offer. If you’re not careful, you might find yourself on the receiving end of a personal loan scam where you could https://paydayloansohio.net/cities/ashville/ potentially lose money.
You can learn how to check if a loan company is legitimate and avoid being a victim of fraud. Here are common signs of a potential loan scam.
Get pre-qualified
While this isn’t a comprehensive list, some of the most common ways to spot a personal loan scam include the following:
1. The lender isn’t interested in your credit history
Truly reputable lenders make it clear that they’ll need to look at your credit, sometimes getting reports from all three major credit bureaus (Equifax, TransUnion and Experian). Most lenders need to know whether you have a history of paying bills on time and in full to make sure you’ll be diligent about repaying a loan.
Fraudulent businesses aren’t interested in your creditworthiness. They tend to seek high-risk borrowers who are likely to fall behind on loan payments and incur excessively high late fees and penalties.
There are reputable lenders that offer bad-credit loans, taking into account more than just your credit score when determining your eligibility. However, these lenders will still typically ask for things like your income, employment information and education before offering you a loan.
Takeaway: Do your research and make sure you’re working with a lender that’s interested in your previous financial history, even if it isn’t all that great.
2. The lender isn’t registered in your state
The Federal Trade Commission (FTC) requires that lenders and loan brokers register in the states where they conduct business. Check the lender’s website to verify the list of states where it legally conducts business. If a lender you’re interested in does not list any registered states, you could be dealing with a loan scam.
Checking registration is a key step to ensure that you’re dealing with a reputable company, separating the frauds from the legitimate businesses.
Takeaway: Verify lenders are registered in your state before sending over banking and personal details. If they don’t operate in your state, they don’t have the authority to loan you money.
3. The lender demands a prepaid card
Some scammers have been known to require prepaid debit cards or gift cards from borrowers, claiming that they need it for insurance, collateral or fees. This is a scam. Legitimate financial institutions may charge a fee for your application, appraisal or credit report, but those charges are deducted from your loan.