There are several consequences of having a poor credit score. Bad credit majorly affects your ability to take a loan. If you find a way to borrow money anyhow, it is your credit score that influences the interest rates charged by the lenders. Generally, the lenders count you in the category of a risky borrower and deny your application in most cases. Due to this, the fraudulent lending companies hunt on you as they know that you are desperate for funds. Unfortunately, the fraudsters start making funds from you by offering bad credit loans on extremely high rates of interest.
Signs of Fraudulent Lenders
People, reeling on bad credit history, often get worried of hearing a ‘No’ from the high street banks. On the top of this, they refuse to turn to private loan industry due to the presence of loan sharks. Due to this, people usually think that it does not make a sense to go to the online marketplace. Here are some points that might help you to avoid the bad credit loan scams:
- Upfront Charges
You should consider the lender ‘Scammer’ if you are promised to be lent but only after you pay the fee to get the assured acceptance. It does not make a sense to pay money to borrow money. If you come across the lender, who demands you a processing fee, you should avoid signing any deal. Usually, legitimate lenders do not ask for any charges to let you avail bad credit guarantor loans.
- Prepayment Penalties
Charging prepayment penalties is the most obvious sign of fraudulent lender. If you are more likely to avail a loan for enhancing your credit score, you should keep your eyes and ears open. Loans sharks may ask you to pay penalty for making early repayments but the genuine lender will not.
- Hidden Charges
Another sign that you are dealing with the scammer is that the company charges an extra fee with the interest rates. Usually, loan sharks do not keep the transparency while lending you a loan. Here it is your responsibility to check whether extra charges are attached to repayments or not. Just because the loan deal comes in your hand easily does not mean that it is a legitimate lender. Carefully compare the interest rates and evaluate the repayments to make sure everything is fine.
- Over Popularised Rate Quotes
All the lenders promote their loan products online and provide the complete details about their interest rates and lending policies. There are also a few lenders, who over popularised their rate quotes to attract the borrowers. Once you availed the loan, some lenders ask for more amount than you signed in the agreement. Beware of companies charging you higher rates than the finalised rates. Availing loans for bad credit people is safe only if they do not share their social security number and bank account number.
If you do not want to be a victim of a bad credit loan scam, you should keep the above mentioned points in mind while shopping. It is also the good idea to check out the customers’ reviews to judge the lender’s authenticity. Make sure the lender is not compelling you to sign a loan deal on stringent lending norms as it can affect your monthly budget and financial goals.