Loan Alert: Financial Scams To Watch Out For This Christmas
Christmas carols are all over town and as the temperature drops, we are all getting excited to spend the holiday season with our loved ones. With the festivity coming, plans of giving gifts and family gatherings are in mind. Pretty sure, you already have things in mind on what you want to buy for yourself or for the people dear to you.
In as much as you are busy planning for the holidays, there are some people who are on the lookout to take advantage of your needs. Of course, some of you may need help by getting loans but you should take extra precaution.
To ensure that you’ll be spending the holiday season without worries, here are loan scams to be aware of.
Private Student Loan
If you happen to be a student, then you should stay away from a private student loan. During the holiday season, banks, credit unions and other lending institutions offer these loans, targeting students in need of fast cash. This is not the type of loan doesn’t offer flexible repayment options unlike those offered by a federal loan. Plus, you’ll end up paying interest rates that are higher than the fixed rates. At all cost, you must not fall for this type of loan to avoid getting knee-deep into repayments.
Cash Advance Loan
Cash advance loans are pretty common. This type of loan can be used for emergencies such as groceries, car repair or bill payments. However, you need to pay a fee to borrow the money, even if it is for a week or two. Some offer an extra 3%-5% on the amount withdrawn and that doesn’t include your interest rates. Yes, it can be tempting but this type of loan must be avoided.
Car Title Loan
As the name suggests, a car title loan requires your car title as a collateral for your loan wherein you can receive a loan amount worth up to 50% of the car’s value. The catch? You’ll be paying an interest of 25% per month and you should pay it in the span of 30 days. Imagine the amount of money you’re going to pay especially the high-interest rates. Failing to repay on the terms stated on the contract can lead to the repossession of your car. Certainly, you wouldn’t want that to happen, right? So, steer away from this loan. Car title loan has more drawbacks than advantages.
Pawn Shop Loan
Pawnshop loans are also common. In order for you to receive loans, you’ll need to take something of value, let’s say, jewellery or a computer, to use as collateral. The pawn shop will lend an amount that is a percentage of the item’s value. Most of the times, the repayment option is just good for 30 days and there are some that offer up to 90 days with interest. The interest rates can hurt, though.
Loan Scams To Watch Out For
In this time of year, scammers can disguise themselves and claim to be a legit lending institution to feed on your personal information especially online. Once they get their hands on your information, they’ll use it to gain money - an advantage on their end and a terrible loss on yours.
Given this, here are the top loan scams you should be aware of so that you won’t fall into their mischievous traps.
Nowadays, scammers use emails to reach more people. If you receive suspicious email messages containing errors in spelling, capitalization, punctuation and/or grammar, then that’s a red flag. Again, loan offers must be put in writing.
If you happen to receive a phone call offering loans, then, don’t ever fall for it. Keep in mind that it is illegal to make loan offers over the phone. All loan offers must be in written form to ensure the legality of the fine print.
Whenever someone sends you a message, email or phone call telling you to pay money upfront before they can process your loan application - disregard it. It’s a scam! Legit lending companies have no hidden fees and they are obliged to disclose all fees involved in your loan application.
Individual Wire Transfers
As a responsible lender, don’t believe those who require you to send money through wire transfers. It should cause a concern when a “so-called” lending company asks you to do so because legit lenders always provide their business information for payments. Always check the lender’s credibility by contacting the Attorney General or Financial Regulations office in your state.
Don’t let scammers ruin the joy of the holiday season. Arm yourself with knowledge on how you can prevent them from making you a victim of their mischievous acts. Remember, never give out your personal information such as your social security number, date of birth, bank account number, etc. They can use this information for their own personal gain including identity theft or stealing from your bank account. Only provide information when you are certain of the lending company’s credibility.
In any event, you’ll need money, be sure to ask assistance from legit loan providers and check your options before borrowing. If you suspect that you have been a victim of a loan scam, immediately report the incident to the authorities. Happy holidays!