Obtaining a loan can help alleviate the need for extra money when you need it most, and can help you afford items which may otherwise be unattainable. However, if you unknowingly agree to do business with a less than reputable company, you may be paying for much more than you bargained for. There are many companies both online and offline that pretend to be legitimate, when in fact they are predators trying to steal your money and personal information. In order to avoid these money scams, follow these general “rules of thumb” before entering into a loan agreement of any sort.
- Do your research-Before taking out a loan or purchasing a product both online and offline, make sure the company is reputable and in good standing. Even if a website or business looks professional and legitimate, it is important to take the extra time to research the company in order to avoid major financial issues down the road.
Read the fine print-Before signing the dotted line, it is important to first read the fine print. If the details of any transaction or application aren’t apparent and understandable, don’t follow through. Incomprehensible or hard to find details could be warning signs of a scam. The fine print should also note the company’s interest rate, which could be up to 500% in some instances! So, make sure to thoroughly read through this section before committing to a contract.- Check state laws-Since U.S laws regarding loans constantly change, it is important to review state laws regarding what kind of interest can be charged and the consequences of being unable to repay the company. This will prevent you from entering into a loan scam and protect you from unlawful collection practices.
- DO NOT pay anything up front– Companies that request funds prior to disbursing the loan are most likely loan scams.
- Never transfer money to someone you don’t know- If a lender, company, or person asks you to transfer them money and you have never heard of them before or you cannot find any information on them, do not do it! Keep this in mind especially if they are asking you to transfer money to another country. These encounters are almost always a scam.
- Review your account statements- After you have committed to a loan agreement, regularly review your account statements (bank, credit card, etc.) to check for unauthorized billing charges. If you suspect any unauthorized charges, ask your bank or the merchant about it, and then dispute it if necessary.
Falling victim to a money scam or loan scam can be a horrible experience to undergo both financially and emotionally. If this has unfortunately happened to you and your identity has been stolen in the process, check out these Immediate Steps to Take if Your Identity is Stolen to resolve the issue as quickly as possible.