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The holidays are over and you realize
that you over-extended your already shaky finances. You
receive either an e-mail, a letter in the mail, hear a
radio ad or see a television commercial offering you a
loan, regardless of your credit history, to help you
consolidate your bills and get out of debt fast. What do
you do?
If you are a savvy consumer, you
delete the e-mail, throw the letter in the trash, and
turn off the radio or television. You may also see these
types of loan offers in the classified sections of the
newspaper. Be wary of applying for loans where you call
an 800, 877 or 866 area code. Be mindful that just
because your local television, radio or newspaper airs
or publishes these types of ads does not mean that the
company placing the ad is legitimate or trustworthy.
If you investigate further, you’ll
find that the “free” loan includes an upfront fee,
sometimes ranging in the hundreds of dollars. These ads
will say that the upfront fees are for processing your
loan and credit checks. However, after you pay the fee,
chances are you’ll either receive nothing or a “credit”
card that can only be used for a certain company’s
products. This scam is called the “advance-fee loan”
scam and it is illegal in the United States.
No legitimate lender would require you
to pay fees prior to receiving your loan. This is not to
say that a legitimate lender would not charge you fees
to get a copy of your credit report or for an appraisal,
but these fees would be part of the total loan amount
that you receive, or are payable at closing.
Another consideration to keep in mind
is that a legitimate lender would never promise you a
loan without first carefully reviewing your application
and checking your credit report.
There is never a quick credit fix.
These unscrupulous scam artists prey on the elderly, the
unemployed and those in dire financial straits.
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If you find yourself a victim
of this scam, call the Federal Trade Commission at
1-877-FTC-HELP or file a complaint online. Keep in mind
that these scam artists are usually working for an
unscrupulous company.
Here’s a checklist with some suggestions to help you
avoid being victimized:
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If you cannot get a loan through
your local community bank or other reputable financial
institution, ask a friend or family member to co-sign
a loan for you.
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Do not respond to an e-mail
offering you a “free” loan as it is probably
fraudulent.
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Do not agree to pay any fees before
you receive your loan. Remember, a legitimate lender
will not require upfront fees.
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Do not be tricked into believing
that your loan will be guaranteed regardless of your
credit history.
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Be sure to get in writing exactly
what you have been promised.
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Never give out your bank account
information, social security information or credit
card information unless you are positive that the
originator is legitimate. However, understand that
federal law requires regulated financial institutions
to notify customers in writing that this information
is required at the time of the loan application.
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“If it sounds too good to be true,
it most likely is!”
CONSUMER TIPS is provided as a public
service by the Missouri Independent Bankers Association
AND
Community Bank of the Ozarks
P.O. Box 43
Sunrise Beach, MO 65079
(573) 374-5245
1-800-927-4314
www.cbobanker.com
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