Business Loans
How To Avoid a Loan Scam
Written by Ashwin Satyanarayana for Gaebler Ventures
The demand for money is huge as consumerism has grown enormously over the years. The capitalistic economy survives on OPM (Other People's Money). Due to this huge demand, money is being offered as a carrot stick with repercussions unseen by the naked eye. Before you know it, you may get caught in a loan scam. Here is how you can avoid it.
It's true that the engines of a capitalistic economy can only run when there is OPM (other People's Money) also called as business credit in the form of loans made available for eligible entrepreneurs.
Since the demand for money is huge, it is highly likely that some unscrupulous people can possibly leverage the situation and cheat you, bilk you off your money and finally ruin you financially. Here are four ways to make out if a loan offer is a scam or not:
Nothing is ever guaranteed, especially not a loan
One of the things that literally screams "scam" is a loan offer that seems to offer "guaranteed loan approvals." According to the U.S Financial and Literary Commission, lenders typically do not guarantee loans before analyzing the financial health of the loan applicants and other things such as credit history and an applicant's capacity to repay the loan.
You will never have to pay up upfront to fetch yourself a loan
If you have been asked to pay up front, it is yet another sign of a scam waiting to happen. As a loan applicant, you will never have to pay anything to anyone to get a loan - especially not to a third party agency or any random individual. Of course, there are loan fees and these fees are paid to the establishment that actually lends out to you. The amount you have to pay in fees is clearly stated in writing and is executed only when your loan is actually sanctioned.
Check for the location
One of the first checks you should be making when looking at an offer for a loan is to see where the loan processor/lender/establishment is located. If it was a website or an advertisement, do you see proper and legitimate contact information? Do you also have a phone number with an actual person answering it? Without "due diligence" don't even think about putting the ink on the paper. If the lender or loan processor may be located outside of the United States, it could very well be a scam for you to bite into.
Scams just got smarter
Some people who scam are sophisticated, to say the least. They might try to target you using methods such as phishing or by planting key-logger software to hack into your financial accounts. In some other cases, fees for processing loans (even before any loans are sanctioned) are requested from you. They would ask you to wire the money out using a retail wire-transfer method. Usually such methods are not even traceable.
Remember, borrower beware!
Ash has an undergraduate degree in engineering and an MBA from Ohio University. Today he is a corporate trainer, business coach and a freelance writer.
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