Spring is only a few weeks away. For many people this means tackling those long-awaited home improvement projects. But, coming up with the cash to remodel can be tricky.
Better Business Bureau is warning of a con where loan brokers, who charge a fee in advance, promise a loan no matter how bad your credit history. But once you pay the fee, the loan never comes. It’s illegal in the United States for companies doing business by phone to promise a loan and require payment before they deliver.
How the Scam Works:
You receive an email or phone call, or see a flyer or online ad, offering you a great deal on a car, mortgage, payday, or other loan. The company may promise a “guaranteed” low interest rate or tell you that you qualify for a special program.
There are many versions of this con: home mortgage refinancing, low-cost government loans, student loan consolidation, special grants, or just an emergency loan to pay the bills. The catch is, there’s always a fee up front, such as a “processing fee” or insurance to secure the loan or lock in a low interest rate. Once you hand over the payment, the “lender” vanishes along with the money.
Tips to Spot This Scam:
• Vague or unclear fees charged before you get the money. There are often fees charged for loans: application fees, appraisals, credit report fees. A real lender will post those fees prominently and collect them from the money they are lending you, but a scam lender may try to collect them as a condition for you getting money. Any up-front fee you need to pay before getting the loan is a cue to walk away.
• Avoid guarantees and unusual payment methods. Real lenders never guarantee a loan in advance. They will check your credit score and other documents before providing an interest rate and/or loan amount and will not ask you to pay an upfront fee. Fees are never paid via Green Dot MoneyPaks, iTunes cards, or wiring money. Unusual payment methods and payments to an individual are a big tip off.
• Do your research. Scammers try to trick you by pretending to be from official or trustworthy institutions (including Better Business Bureau or your current lender) or sounding like a known organization. Contact the agency directly to check the program is real. Also, look them up at www.bbb.org.
To report a scam, go to www.bbb.org/scamtracker.
DAWN JOHNSON is marketplace manager of the Better Business Bureau, serving the Snake River Region from Ontario to Jackson, Wyoming. For more information, visit bbb.org or call (800) 218-1001.