At Helix by Lead Bank, we want our potential loan customers to be as educated as possible about how borrowing works. Unfortunately, the industry is full of predatory scammers offering loans that are just too good to be true. And while it would be great if these scammers just got real jobs, that’s not going to happen, so we’ve put together a list of warning signs to help you spot a loan scam.
The lender is unregistered in your state
By federal mandate, all lenders must register in every US state in which they work. This is part of an effort to prevent fraud by monitoring the activities of these lenders. If you can’t find a lender’s registration information, you can double check on your state’s Attorney General or Department of Finance website. If you’re not sure about a lender you’re considering, it’s a good idea to check.
They advertise over the phone
The Federal Trade Commission prohibits any company from offering a loan over the phone. So while a phone advertisement isn’t exactly an offer and is therefore not illegal, it’s an immediate red flag. Legitimate lenders don’t want to be associated with phone scams, so we tend to stay away from phone advertisements. Since we can’t offer those loans anyway, it’s not very effective advertising. You should be similarly wary of door-to-door loan salesmen. Any legitimate lender will known that canvassing a neighborhood, hoping to find someone who just happens to need a personal loan, is ineffective at best, and shady at worst.
They don’t have a physical address
Be wary of any lender that won’t tell you where their office is. A common scam tactic is to list a P.O. box as the only address for the “business.” This helps prevent investigators from tracking them down, subpoenas in hand. With any legitimate lender, you should be able to physically drive to the office if you need to. Helix is part of Lead Bank, which you can find at 1801 Main Street, Kansas City, Missouri. If you’re unsure about a lender, type their address into Google Maps. You should see a respectable office building with the lender’s name proudly displayed outside. If it’s an empty space in a run-down strip mall or a nondescript house, run.
It doesn’t perform a credit check
Poor credit history, which includes an absence of credit history, can make some scams tempting. Fake lenders will offer you a loan without ever checking your credit history, which sounds great. But they’re not just being nice. They don’t need to check your credit score because they don’t need to know how likely you are to pay back a loan. They’re not going to give you a loan.Instead, they’re only trying to get your personal information or scam you out of money for a bogus “fee,” like the ones listed below.
Credit scores exist for a reason. They help lenders determine how good you’ll be at repaying your loan. That’s the whole idea. At Helix, we check everyone’s credit. But don’t worry. Even if you have fair or poor credit, it doesn’t mean you won’t be approved. Like we said above, an absence of credit history shows up as bad credit, but the majority of our loan customers have credit scores below 650.
If that’s you, you’re not necessarily disqualified. We know how hard it can be to build credit without a loan, and how hard it is to get a loan with sub-prime credit. That’s why we evaluate each customer individually, including a credit check.
It doesn’t have clear terms and conditions
Every loan comes with terms and conditions, and every legitimate lender will tell you what they are. At Helix, we pride ourselves on making sure our customers know exactly what they’re getting into. We don’t want to confuse anyone. We believe a loan should come with no surprises.
Registered, but predatory lenders try to hide fees and expensive penalties in reams of complex legal jargon you’re never meant to read. We avoid this, as well.
But scammers won’t give you any answers at all. Ask them about your APR, your loan term, or whether or not they have early repayment penalties and they’ll clam up or change the subject. Never sign up for a loan whose terms you don’t understand.
It has application, processing, or insurance fees before you get your loan
Here’s where you immediately hang up the phone. This is often the endgame of scam artists. No legitimate lender would ask for any payment up front. Often scam lenders charge “application” or “processing” fees, or want to charge you for “insurance.” This is not to say that legitimate loans are without fees. In our article discussing APR, we discuss those fees and how you’ll be asked to pay them. They don’t include any of the scam charges listed above. In fact, fees will be rolled into your loan payments.
At Helix, our application process is quick, easy, and most importantly, free. As for “insurance,” actual lenders already carry it as part of our operating costs. So yes, you help cover those costs month to month as you repay your loan, but no, we won’t ask for that payment up front.
If a lender mentions anything about a prepaid debit card, walk away. Scammers ask for these because they’re virtually untraceable, a quick and easy way to take your money. This goes for other types of scams, too.
It doesn’t have any customer reviews
We recommend that you Google any loan institution you might want to borrow from. Not only will you find customer reviews detailing the positive or negative experiences most people have, you’ll be able to determine legitimacy. You can find these reviews on the lender’s Google business page, local forums, and social media platforms. Be careful with the latter, though. Businesses can moderate the comments on their Facebook posts, for example. When the business has this opportunity, reviews can’t necessarily be trusted.
But many false lenders won’t bother with social media pages at all. Social networks tend to crack down on scams, and people can report scammers so quickly and easily that social doesn’t end up being worth a scammer’s effort. Most operate on a “slash and burn” model. Get in, steal some money, and come back tomorrow with a new phony name. Any lender with a long-established social presence and plenty of customer reviews isn’t likely to be a scammer.
It pressures you to act fast
Lenders are not auctioneers. We’re not here to crank up the pressure or talk you into accepting a deal that might expire at midnight. But scammers often will. “I don’t know if this rate will be available tomorrow” is a common phrase in their toolbox. They want you to make a quick, uneducated decision.
Unfortunately, this is also a behavior espoused by many “legitimate,” government-registered lenders, as well. Their fast-talking, high-pressure tactics are designed to get you to sign before you’ve understood the complicated terms and conditions mentioned above.
At Helix by Lead Bank, we’ll never pressure you to accept any terms, and we’ll explain those terms clearly in language normal people can understand. Our rates don’t expire tomorrow, because that’s not how lending works.
Instead, it’s our goal to educate our loan customers. We want you to have all the information you need before you make a decision about whether or not a personal loan is the right choice for you.