It's important for consumers to understand that though a fee can be asked for certain financial services, you should never be asked for money upfront for an actual loan.
These unscrupulous subjects and their practices cause a great damage to consumers and to the financial industry as well. The trustworthiness of legit online lenders and other companies that provide financial services like intermediation gets harmed by these practices. There are however some tips that can help you identify a scam from a legit bad credit lender or online financial intermediary.
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Money Down? Money Upfront?
There are only certain loans that can require you to put money down. However, that amount is never handed over to the lender but to the seller of the property (real estate, vehicle, etc,) that you are planning to purchase with the money you obtain from the bad credit loan. This amount required as a down payment, only limits the percentage of the purchase price you'll receive from the lender.
As regards to money upfront, you should NEVER provide any amount to the lender because any cost or fee can be included in the bad credit loan and thus it makes no sense to ask for money in order to provide money. If you run into a lender (not intermediaries that usually charge small fees upfront and are completely legit) asking for money for insurance or security in order to provide finance, chances are that you are facing a scam (not intermediaries that usually charge small fees upfront and are completely legit).
How About Intermediaries?
There are many online companies that offer intermediary services providing access to lenders and other financial services. Some of these companies do charge a small fee for their services and are completely legit. This practice is legal because the company is not actually offering a bad credit loan but intermediary services and thus it's perfectly lawful to charge for them small amounts.
What these companies actually do is gather plenty of information regarding different lenders and offer it to clients through a web portal. They may also provide some guidance as to which loan type should someone look for according to the needs and qualifications that he or she possesses. It's time saving and also money saving; thus, it's perfectly reasonable to charge a fee but remember that only for intermediary services and not for providing an actual loan.
Tips To Know If You Are Facing A Scam
There are things that can tell you whether an offer is a scam or not. For example, if you receive an email, phone call or are taken to a web page where you are asked to send money as a security or deposit for a bad credit loan, chances are that you are facing a scam. And the payment method chosen will immediately confirm you this fact.
If you are required to send the money in cash through post, money order or other services you need to doubt about their legitimacy immediately. On the other hand, most bad credit loan intermediaries who are legit online merchants will offer as payment methods online services like Paypal.com or Credit Cards which can protect you from scams through their customer protection programs and the ability to get your money back through them.
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