How to Tell If a Loan Offer Is Legit?

If a loan offer seems too good to be true, it usually is. Scammers prey on people desperate for financing, offering loans without credit or income verification. This looks like the miracle that a struggling consumer has been waiting for. If you jump at an offer without determining its legitimacy, you can end up in a worse position than before. To spot a fraudulent loan offer, know what to look for to verify its validity.

Step 1

Examine the method of delivery. Be wary of phone or email offers. It's illegal for a company to guarantee you loan approval or request advance payment by phone. Most legitimate offers come as official correspondence on company letterhead.

Step 2

Call your state Attorney General's office or Department of Banking or Financial Regulation and find out if the soliciting company is registered. If so, the loan offer probably is not a scam.

Step 3

Look at the time you have to respond. Loans are approved with a thorough and diligent review of credit, capital, collateral, character and conditions. If a company is pressuring you to act quickly, it likely doesn't want you to think too carefully about them.

Step 4

Read the advertisement carefully. Be wary if the company guarantees approval without reviewing your credit history. Legitimate lenders want to see that you have a good record of repayment.

Step 5

Review the contact information. Some scammers will name legitimate, well-known lenders in the message but instruct you to contact a third-party consultant. The scammer is citing these names to lull you into a false sense of security.

Step 6

Look for a request to wire money in advance. A scam will often indicate that you need to provide an application fee or down payment up front via Western Union or MoneyGram. Many legitimate lenders require an application fee, but they allow you to pay via check at a branch location.

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