One of the fastest growing scams in North America is the “bad credit loan” scam. In these scams a legitimate appearing financial company offers individuals with bad credit history a loan, often these loans are “guaranteed” regardless of the client’s credit history, even if they have a bad credit or no credit they will get the loan. All they will have to do is pay an upfront “security deposit” for the loan because of their bad credit history, the problem is that the loan will never arrive and the security deposit will be lost.
Consumers who have lost their jobs are left with bills to pay and have no access to credit, in desperation they turn to alternative ways for credit. Many feel relieved when they find “financial companies” who give them a loan with “bad credit history” or “regardless of past credit history” the excitement quickly turns into frustration when they come to realize that they have been a victim of fraud and will not only not get the loan they were promised, but have also lost their “fee” or “security deposit”.
Sometimes it can be hard to detect these companies, here are some tips to help you differentiate between legitimate financial companies and fraudsters.
Tips To Detect Loan Fraud
- The company asks for an upfront payment. This payment can be disguised as a premium, insurance, collateral payments or a security deposit. It is ILLEGAL to ask for upfront payment for a loan in US and Canada.
- Don’t give out your personal or financial information over the phone or the Internet unless you’re familiar with the company. This includes bank account information, SIN, date of birth, etc. This information could also be used for Identity Theft.
- Legitimate lenders never guarantee or say that you will receive a loan before you apply, or before they have checked out your credit status or contacted your references, especially if you have bad credit or no credit record.
- Do your Research! Type the name of the company into a search engine along with the word scam. The results may reveal a history you didn’t expect. Try to visit their office, if it is local.
- Verify the company - Get the company’s number in the phone book or from directory assistance, and call it to make sure you’re dealing with the company you think you are. Check with the Better Business Bureau to see the company’s record.
What If Fallen Victim to Bad Loan Scams?
- In Canada, call Project Phonebusters in Canada toll-free at 1-888-495-8501.
- In Canada you can also call the Competition Bureau at 1-800-348-5358.
- Contact local Policy as well as Federal Policy (RCMP and FBI)
- File a complaint at ICCC and FTC
Resources:
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Article by Ray
Ray is an ex-financial adviser and the founder of Financial Highway. Currently working in the financial industry and working towards completing his Chartered Financial Analyst, CFA, designation.
Ray has written 271 articles.
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{ 13 comments… read them below or add one }
The fraudsters may even use variations of legitimate-sounding names, for example: “Whotson Whyat” (as opposed to Watson Wyatt, which is a global HR consulting firm). The fraudster may even obtain an Ontario Govt business name registration matching their phony name, so as to pacify someone doing very superficial due diligence.
I tried to assist a lady from South Carolina who was victimized by a Toronto-based fraudster advertising in a local paper down there using the name “Wotson Whyat”. She was taken for $3,500 US that she gave as “security” for a $10,000 loan. When she called me, she wasn’t so concerned about getting back her $3,500 deposit, but she just wanted her $10,000 loan advanced to her. Unbelieveable.
These stories do not have happy endings.
Thanks for sharing! sad stories!
Thanks for sharing this info blog.
Another bad credit scam is when the web site offers to provide the borrower (hopeful) a so-called “list” of bad credit lenders who “guarantee” to approve them quickly. The lists usually cost between $10 to $50.
The lists are usually just a list of links pulled from a Google or Yahoo search.
Rip off.
Once your bad credit loan has been approved, the money is yours with no restrictions; so you can spend it on whatever you would like. However, it is your responsibility to repay the loan according to the agreement you sign when you receive your money. Because of the increased interest rate and other fees, instant loans like this should be reserved for emergency situations only.
Yeah, it’s funny that we’re talking about scams and one of THE biggest scams in the financial market is legal – these Payday Loans. Interest and fees that can result in APRs as high 500%
This company took me $3000.00. I was a desperate person looking for a loan after I got discharged from Bankruptcy and was suprised when this company called me and said I was approved for a loan. They did tell me I had to put up $2500.00 for insurance that would secure my loan. I was stupid enough to fall for it and now I am out $3000.00 and they are laughing at me. People out there do not have a heart and take people for there savings when they know the person is desperate.
Six Tips On How To Spot A Bad Credit Loan Scam
The suffering and desperation caused by the ongoing
credit crisis and job losses, have spawned a whole
new growth industry.Bad Credit Loan Scams It’s a
particularly horrible phenomenon, because the people
that operate these scams are preying on those that
most need help, and they don’t care if they put the
last nail, in a family’s financial coffin…
More Information –> http://bad-credit-solve.blogspot.com
this is one loan that all most got me they are verey good , it was for a 5,000 loan i have bad cridet so it sounded good to me . when they e-mailled me back saying it was aproved but needed $500.00 down or somthing with value of $5,000 i was thinking that this was good , so i e-mailed them back saying i hade a car , lol so they said yes this would work they would come and get my car bring it to toronto put it in a indoor storage facilty ontill the $5,000 was paid in full. ya the web site is http://WWW.silvertonfinancialtrust.com silverton Financial trust … They are verey good ..
Hi Robin Benoit,
I was actually on this website as well. I had asked to meet with them before I send any money or info. on what I would like to bring in for the loan.
i had apply for aloan to silvertonfinancialtrust they had wrote back and said i was approved but never got back to me after that i tried calling them but they never answer or nuttin i think its a scam
Bad Credit Debt
Bad credit debt is any form of debt with a high interest rate for things you really don’t need. An example would be to charge an expensive vacation on a credit card that you can’t really afford.
The worst form of bad credit debt is credit card debt because it carries the highest interest rates. It’s easy to over extend yourself with credit cards and it is by far the way most people acquire bad credit debt.
The quickest way to recover from bad credit debt is to pay credit card debt down or pay it off completely. The best way to pay credit card debt down is start with the highest interest rate card first. Then, pay on the debt with the next highest rate until you have paid off all of your credit card debt.
It seems that everyone knows someone who has been effected by one of these scams. Watch your money and make sure that you deal with a reputable firm.
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