Common information a real lender may ask for includes: If a lender asks for minimal information and ensures approval no matter your creditworthiness or other financial factors, be wary. Many companies will generate a soft credit inquiry to show you personalized rates. Credit score minimums differ by lender, but most lenders take your credit score into account when deciding to approve you for a loan. Question lenders that guarantee approvalĪlmost all lenders will have some sort of screening process before they can offer you for a loan. Some lenders may charge administrative or origination fees when you accept a loan, but those are typically taken out of the loan proceeds and will only affect the total amount of money you'll receive. "Reputable lenders won't say, 'You send me money now and then I'll send you money later.' It doesn't work that way." "Steer clear of anything that requires you to send money to the lender before there's some sort of transaction," says Jim Houston, the managing director of lending and automotive finance at J.D. They may promise to send you funds after receiving that first payment. Don't pay money up front for a loanĪ classic tactic that many scammers use is offering you a loan with the caveat that you send them money up front. See if you prequalify for a personal loan with no impact on your credit score > 2. Some lenders charge no fees, but others will charge origination fees, late fees, or prepayment penalties, so it's important that the fees your offer match the one listed on the company's website. You may have to fill out some information to see what rate you are prequalified to receive.Īlso, review the fees listed on the offer. Homework is always super important, and any reputable lender is going to be very upfront about what their rates and fees are."Ĭheck that the rate advertised in your offer matches up with the rates advertised on the lender's website. "Many times consumers feel like if the lender didn't do a good job of explaining rates and fees, they may have been taken advantage of. "First and foremost, understand the interest rates and fees," says Todd Nelson, senior vice president of strategic partnerships at LightStream. If you're looking for comprehensive lists that compare different types of loans among many lenders, you can check out our guides on the best online personal loans, best small personal loans, and best personal loans for bad credit. Read reviews on external websites, check out the company's Better Business Bureau score, and ask friends and family about their experiences with the business. Thoroughly research the lenderīefore you think about taking out a loan with any business, first ensure it's legitimate. Here are four ways to recognize and avoid scams so you can borrow money without worrying. You have many options to protect yourself from getting hurt by personal loan scams and loan fraud. They may even pose as a legitimate company and offer lower rates or fees than the real lender advertises on its website. Scammers may try to rip you off by asking for money up front or promising guaranteed loan approval. If you're looking to take out a personal loan for anything from consolidating debt to financing a home improvement project, it's important to make sure the lender you're trying to borrow from is legitimate.
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