Advance fee personal Loans are one of the leading financial scams in the United States today that affects those who can least afford it. An advance fee personal loan generally begins with a borrower seeking out alternative means for obtaining a loan. Bad credit or a search for a bargain fee typically brings this person to a website or 800 number that offers quick cash for rock-bottom rates. The friendly new loan representative will offer an application and guaranteed approval for a small processing fee. This same friendly loan representative will accept the cash for this processing fee and never be heard from again.
This is a scam that is heard of all to often and can sometimes rob a person of hundreds of dollars of hard earned money when they can afford it the least. An advance fee loan is given its official sounding name because it requires the borrower to pay a fee before receiving any money whatsoever. This advance fee will often be called a processing charge or third party processing fee and is the key to spotting this money-lending scam. Legitimate lending companies will often draw the money required for processing an application from the profits they ultimately receive on the loan. Not to mention advance fees are illegal in most states and should be your first red flag.
Advance fee lending companies can be quite convincing and can put up the most professional of fronts to the outside world. They have been known to advertise in newspapers, on the radio, and even on TV. They will give take credit information and guarantee that you will receive a loan from their organization. The boldest of all firms will give you references for companies that they have loaned money to in the past and even claim that your advance fee is going to a reputable insurance company.
The best thing to do when deciding whether a company is a legitimate lending agency is to check the company name with the Better Business Bureau. This can be done for free on-line at www.BBB.com. By keeping a watchful eye and always doing your research, you can keep from being fooled by these convincing scam artists.