There are a lot of personal loan options available. While most are legitimate, others have hints of fraud. To help you determine if the opportunity is viable, here are some features to look for in a personal loan scheme.
What is a Personal Loan?
A bit of background on the concepts behind a personal loan. This is a set amount of funds that are delivered in a lump sum. Normally, a personal loan is used to consolidate debt or make a large purchase.
It’s a good idea to compare personal loans to find the best deal. According to Lantern Credit, If you’re not seeing the rate you want, try lowering the amount you want to borrow or improving your credit score.” This is also a good idea to determine if you’re looking at a personal loan scheme.
Large Sum Offers
One signal that a personal loan offer isn’t what it seems is if they “guarantee” a large loan amount if you’re approved. You don’t receive a $50,000 unsecured fund distribution without some verification of solid credit history or available income.
In this scheme, you’re normally offered a sum that’s far less than the company promises. Perhaps less than five percent of the value. No matter how desperate you are, don’t take this type of loan.
Exorbitant Payments
Another home loan scheme is exorbitant payments on the funds you’re given. Generally, a financial institution requests monthly payments. Companies that attempt to maximize their profits ask their customer to pay twice a month.
On top of this, the amounts equal a total that’s double or triple the initial loan amount. The reason is exorbitant interest rates. If you don’t look at the loan agreement ahead of time, your payments could wipe out the amount you received.
Guaranteed Approval
You probably receive several communications that declare you are guaranteed approval for a personal loan. Overall, this is a false statement. Generally, a financial institution doesn’t make this promise due to risk.
Granting you a personal loan doesn’t guarantee it will be paid back by the owner. This is the reason that reputable financial institutions review a potential borrower’s debt-to-income ratio (DTI) and credit history before approval. It would be negligence on their part if they didn’t.
No Address or Out-of-State Registration
According to rules enacted by the Federal Trade Commission (FTC), a lender must register in the state where they do business. If the lender doesn’t list the states where they’re registered or don’t have an address at all, they may be fraudulent. In cases such as this, it’s best to contact your state’s attorney to see if the organization is valid.
Pressure to Act Immediately
Normally, financial institutions offer personal loan specials. However, they don’t pressure you to act immediately to take advantage of them. Those who work a scheme are prone to do this by saying the offer goes away if you don’t agree today. This high-pressure sales tactic is a warning sign that a company is fraudulent.
Refer to the above items the next time you see a personal loan offer that’s too good to be true. They will help you avoid financial headaches.
