Consumers lost more than $5 billion to fraud in 2021, a 70% increase from the previous year. If you want to avoid becoming a victim of fraud, stay alert and informed. Before you sign on the dotted line for any loan, consider these potential red flags:
Avoid Loan Scam Lenders
One way to avoid a scam is through a detailed review of the lender. Reputable lenders typically have a secure website with a physical address listed. A lender may not be reputable if they lack a website or if their website isn’t secure (look for an icon of a locked padlock next to the URL in your browser). In addition to their digital web address, take note of their physical address—it should not just be a PO Box. A reputable lender most likely will have a physical address for the location of their offices.
If you feel uneasy about a lender, confirm that they are registered to do business in your state. The Nationwide Multistate Licensing System (NMLS) maintains a Consumer Access database to help consumers confirm that financial services companies and professionals are authorized to conduct business in their state. The Consumer Financial Protection Bureau also provides a list of state banking regulators for a quick reference to help you contact your state’s regulator.
Be Suspect of Guaranteed Approval Offers
Reputable lenders only approve borrowers after a thorough examination of an applicant’s finances and credit worthiness. While lenders may have different criteria for how they determine to whom they lend money, if a lender offers you guaranteed approval before they even look at your credit, consider it a warning sign. Each lender might be a little different, but they all will have a list of requirements that need to be satisfied before they approve a loan. Even if you apply for a relatively small personal loan online, you will most likely need to provide some minimum information, such as your social security number, proof of income, and a photo ID. If you apply for a larger loan, like a home mortgage, the necessary document list will likely grow to include such items as bank statements, tax returns, and employment documents.
Pay-to-Play Loan Schemes
Most lenders have fees associated with their loans including application fees, which often include the cost of credit checks or other administrative fees; however, a reputable lender will be upfront with their fee structures before you submit a loan application. Some lenders also bundle fees into the total cost of the loan.
If a lender asks for an advanced fee even before the normal application process, beware. Scammers that make promises of easy loans if you pay an up-front fee likely have no legitimate loans to offer. Application fees, which are legal and required by many reputable lenders, do not result in a promise of approval.
Another red flag could be when a lender attempts to tack on additional fees—not previously disclosed—before they approve you for a loan. In the case of a mortgage loan for example, a reputable lender will disclose all fees as well as the interest rate and monthly payments in a loan estimate before authorizing the loan.
The bottom line is that if your lender appears to be hiding anything and is not providing written answers regarding your loan, you should be cautious. Do your research and protect yourself to try to avoid becoming one of the millions who have fallen victim to fraud.
If you have questions about a Mariner Finance loan, call 866-382-5080 to speak with one of our licensed loan officers.