There are literally thousands of websites providing online loans. Getting a loan online is a great convenience. However, there are several scenarios to be aware of that will help you avoid falling victim for a loan scam or paying more for your loan than you should.
Watch out for advance fee loan scams!
Online loans are usually just as safe as applying at a bank or credit union. However, there are predatory lenders out there that make a living taking advantage of those in desperate times in need of immediate cash. The most common type of online predatory lending is called 'advance fee loan scams'. Advance fee loans NEVER pan out. If you ever apply for a loan and receive notification that you have been approved, but are told that you will need to first wire (usually via Western Union) any amount of money (they usually only ask for several hundred dollars) as security for your loan, terminate all communications. Think about it, why would you need to send money to get money?? Save the emails, letters, phone numbers, and anything else related to any company requesting money up-front for your loan approval and forward it to your local authorities.
Read the fine print!
It is very common for lenders to market loans for very low rates, often even 0%. But, lenders have to make money, so 0% is not realistic. When you read the fine print of these 'too good to be true' loans you'll discover all types of hidden charges and fees like loan origination cost, closing fees, very high pre-pay penalties, etc.. And, it is also important to note that lenders that offer loans at 0% often market these terms to all credit types but are only able to approve those with pristine credit for such rates.
Avoid any type of repayment insurance!
It is very common for loan providers to try and upsell the consumer products that they will never need. The most common being 'loan repayment protection insurance'. This is an insurance product that enables consumers to insure repayment of loans if the borrower becomes ill, dies, loses a job or is faced with some other type of unexpected crisis that prevents them from being able to satisfy their loan payments. This type of insurance is very expensive and we feel it is not wise to pay for a potential doomsday scenario. Don't prepare for bad...prepare for good!
Related Reading:
-Maximizing Your Borrowing Power With a Strong Credit Score
-Tips For First Time Borrowers
-Understanding Interest Rates
-Advantages of Online Loans
-Getting Approved for Favorable Bad Credit Loans
-Impact of Defaulting
-Unsecured vs. Secured Loans
-Tips For Reducing Common Types of Debt
-Advance Fee Loan Scams
-Advantages of Personal Loans
-Loan Aspects to Avoid
-What Are Installment Loans?
-Downside of Signature Loans