7 Warning Signs of Personal Loan Scams - YouTube

Loan scams trap more than a million Americans every year with a loss of over $900 million.

In this video, I’ll not only show you the seven warning signs of a loan scam, I’ll

reveal the two most common scams that cost you money.

We’re talking online loan scams today on Let’s Talk Money!

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Joseph Hogue with the Let’s Talk Money channel here on YouTube.

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Something I haven’t shared on the channel yet is how the Great Recession destroyed my

credit and finances.

I was leveraged to the hilt and saw it all fall apart when housing tanked in 2008.

My credit score was shit and I couldn’t get a loan to save my life.

Now that’s another video but how I was able to recover was through a personal loan to

consolidate the debt.

It helped me get back on my feet.

So I’ve been sharing mine and other people’s experience on the blogs since 2013 but every

story I’ve shared hasn’t always been a happy ending.

In fact, the most popular post on one of my blogs, PeerFinance101, is about the personal

loan scams I’ve seen…and that post has 74 comments from people and their experiences

with online scams.

Readers like Christine that have been scammed not once but three times by different companies.

Or Carol that shares her experience with one of the most common loan scams, one that I’ll

show you in this video.

This is Important!

Whether you’re planning on getting a loan or not, watch this video because it could

save you thousands someday.

Besides the money it will save you, it could save your finances, your credit score and

your sanity.

I’m going to start with just a quick explanation of what are personal loans and why you might

need one someday.

Then I’ll reveal those seven warning signs that you’re being scammed online with examples

of real-life scams.

Finally, I’ll show you how to tell if an online loan company is legit so stick around

to the end of the video.

Again, even if you don’t need a personal loan now, write these warning signs down because

this affects everyone.

The Federal Trade Commission received more than 1.1 million fraud reports last year with

over $900 million in fraud losses.

So a personal loan is simply an unsecured loan you get from a traditional bank or online

lender.

Unsecured means you don’t have to put up your house or car as collateral and you can

use the money for whatever you like.

The average rate on personal loans is around 14% so this isn’t something you use for

casual spending but that’s still below the 18% average rate on credit cards so about

two-in-three loans are taken out to pay off card debt.

Another upside is that the online lenders usually have lower credit score requirements

than traditional banks so you can usually get one of these loans even after your FICO

falls like mine did in the recession.

But you can imagine attracting borrowers that have nowhere else to turn, this brings out

the scammers, the loan sharks and the hackers.

Almost a trillion dollars a year is stolen from people through fake loan promises and

scam sites.

Like a lot of things online, the regulators just don’t have the resources to watch everything

that happens so a lot of these scams just won’t die.

But there are warning signs you can watch for, hints that will tip you off to a scam

before losing your money.

The first warning sign you should watch for is promises of no credit check loans.

Now I know these sound great, get a loan even with bad credit because the lender doesn’t

even check your FICO score.

Understand though that legit lenders are in the business of charging a fair interest rate

depending on the risk in a loan.

The only way they know the risk is by checking your credit report and score so if they’re

promising you money without doing this, you’ve got one of two things.

You’re either going to get a super-high interest rate, we’re talking 35% a year

or higher.

At this rate, even if a lot of those loans aren’t repaid, the lender is going to make

money.

But a lot of these no credit loans are just outright scams.

They’re going to rope you in with that promise then drain your bank account before you know

what’s happening.

The next warning sign, and this is where most of the scams make their money, is with upfront

fees or collateral.

No legit personal loan site will ever charge you an upfront fee before you get your loan.

Most charge an origination fee which is taken out of the loan before it hits your bank account

but that’s only once you’ve gotten the loan.

Now this might be worded as an application fee or a processing fee or whatever.

Think about it though, lenders are in the business of processing loan applications and

making loans, why would a legit lender charge you a fee for the possibility of making money

off your loan?

Please do not pay a fee to an online lender.

I’m linking to a few loan sites I’ve used in the description below the video, some that

don’t even charge origination fees.

Even if the loan site seems legit, there’s no reason to pay any fees upfront.

The third warning sign, and this one is probably the best for spotting scammers, is an unregistered

lender.

All lenders, even online ones, must register in each state where they want to do business.

This is usually through the State Attorney General’s office or with a special state

banking regulator so check online for your state.

The state regulator examines applications for fraud companies and also takes complaints

so this is a great resource to check anytime a lender comes to you to offer a loan.

Four more warning signs before I reveal the two most common scams and how to tell if a

lender is legit.

Another big warning sign is when the lender shows no physical address on the website or

in emails.

The FTC spam-act requires that all emails from a business must include a physical address

somewhere on the page.

Now, this can be a PO Box but it still has to be listed and something you can check.

Even if the address on the company’s website or in emails is a PO Box, you can still check

to make sure the company is actually registered in that state.

This is an easy one that will catch most scammers.

They either won’t list their address or if they list a fake address, they won’t

take the time to register the business in the state.

Number five here and probably the most common warning sign to a loan scam is emails out

of nowhere.

It always amazes me how spam email catches so many people every year.

Any stranger offering you a commission, bonus or any money in an email is 99.9% of the time

a scam.

Ask yourself, why are they contacting me and not someone with experience in this kind of

thing.

These email scams happen in personal loans as well.

You receive an email with a loan offer and a rate that is too good to turn down…along

with a link where you can supply your personal information.

The way most of these work is the link in that email gives the scammers access to your

computer through some kind of virus or malware.

You click on the link, get that virus on your computer and you’ve just had your identity

stolen.

Never click on a link or open an attachment in an email from someone you don’t know.

If it’s from a lender or company, go directly to their website instead of clicking on the

link in the email.

This next warning sign would be a fun one if so many people weren’t losing thousands

a year to scammers.

We’re talking about misspellings and bad grammar in emails.

A lot of these loan scams are coming from outside the United States and it’s hilarious

how bad their English is sometimes.

This is an actual email I got from a scammer and I counted at least three spelling mistakes.

Beyond the spelling, you can also spot these by a weird greeting like just using ‘Dear’

or ‘Honorable Sir’ or word choice that just doesn’t sound right.

The seventh warning sign, and this will catch 99% of the scams even if you don’t see other

warnings, is to look at the email sender’s address.

When you send an email from a business account or website, the back half of the email usually

includes the name of the site, right?

So when someone from PayPal sends an email to you, the address is the person’s name

@Paypal or when I send an email from my blog, it’s @peerfinance101.com

Look at that email I got, supposedly from PayPal though, and the address is from @uthscsa.edu

which is weird in itself but definitely not from PayPal.

A lot of times these fraud emails will have a Hotmail or Gmail address because scammers

can set these up anonymously without any identity proof or tracking.

Always double check where an email is coming from before you even consider reading it.

I’m going to reveal two of the most common loan scams I see online but I want to get

your feedback on this.

The best resource we’ve had is people sharing their experience with these to out the scammers

and their methods so scroll down and share your story in the comments below.

If you’ve ever gotten a weird email that seemed like a scam or have a question, scroll

down and tell us in the comments.

One of the most common loan scams is called a phishing campaign.

This is where the scammer will send out thousands of emails with a link in it to confirm your

bank account login or supposedly to verify something.

A lot of times, they’ll even disguise this as helping you avoid a problem.

So the email will supposedly be from your bank and will say it found a suspicious login

to your account.

It will then say to click the link to confirm that it wasn’t you.

Again, when you click on that link or open an attachment, it downloads a secret virus

or code onto your computer that gives the hackers access.

If you get one of these emails and you’re not sure if it’s legit, just go directly

to the company to its website.

Don’t click on the email, just do a Google search or type in your browser to go to the

website and call their customer support.

The next type of scam, and this one is probably the one I see people get caught up in most

often, is a bank wire scam.

The scammer tells you it will verify your bank account with a wire transfer before they

give you a loan.

Once the wire is sent, you’re supposed to send the money back through an ACH payment

or something.

Remember Carol?

This is what happened to her.

She withdrew the money that was wired to her account and sent it back to the company.

Even though the wire transfer shows on your account, it’s never completed because the

sender’s account doesn’t have funds.

What happens here is your account is never credited with the wired money but you don’t

know that until it’s too late.

You withdraw and send that verification money back before the wire is cancelled and you’re

out a few hundred bucks.

After all these warning signs and examples, you probably are ready to swear off personal

loans completely, but they can be a good resource when you need the money.

I couldn’t have fixed my finances in 2009 without consolidating my debt and there are

legit lenders out there.

So I want to share four quick ways to find legit online loans and make sure a company

is for real.

First, always visit a lender’s website directly.

Never click through an email or a Facebook message.

Do a Google search for the company or type the name into your browser.

Avoid no credit check loans and never pay an upfront fee.

You can get a loan even on bad credit and your rate is going to be lower with that credit

check.

Make sure you check to see that a lender is registered in your state and check for a physical

address in any email or on the website.

In fact, just ignore any emails from lenders that you didn’t already apply to.

If you didn’t fill out an application, how did they get your email address?

Why are they just spamming out to everyone offering them a loan?

I’ll tell you, 99% of the time it’s coming from scammers.

Before applying for a loan, click through to this video on the right and five credit

score hacks to boost your FICO 100 points fast.

You’ll get a lower rate and save thousands in interest.

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