There has been a recent surge in popularity of the money lending business. While this trend can be attributed to several things, the high demand for funds plays a significant role. However, it has become essential for borrowers to be careful with where to borrow. Why? Unscrupulous lenders have often taken advantage of borrowers’ ignorance to rob them. You are borrowing because you are in financial need and to be robbed the little that you have is discouraging.
The cases of being conned have been there for long. The wise say experience is the best teacher. However, that can only be the case if you learn from others and not yourself. It can be so painful to learn from your personal experience when it comes to matters of fraud. That is why we are discussing how you can spot bad business credit loan scams. We hope this discussion will help you avoid falling into the hands of scammers. Let us begin.
Bad Business Credit loan scams and how to identify them
There are so many ways in which scammers can dupe well-meaning lenders and make cash to the detriment of borrowers. There are so many business loans scam you are likely to face as a borrower. Every day scammers design inventive ways of squandering your time and rob your hard-earned money as well as your personal information. These issues are more common even in established sectors, so, it’s very important to check such as business loan Singapore. The following is a brief overview of business loan scams.
Advance fee scams
This happens when you are promised a loan at a lower cost when you make an upfront payment. The payment may be named differently to blind you. For instance, the scammers may term it as an application fee or a one-time fee. It may also be referred to as a processing fee. Whichever the name used; the reason remains the same; you are required to submit some money before your loan is approved.
This is a prevalent scam in the market today. You are made to believe that everyone can be accepted for the loan and that factors such as credit history and bankruptcy do not affect your chances of qualifying for the loan at relatively low rates. This is a red flag you should pay attention to. Why? Nearly all lenders have minimum credit requirement and limitations on bankruptcies. In general, having a lower score means you are going to pay higher interests. This does not imply legit lenders cannot ask for upfront fees. In fact, in many cases, banks ask for upfront application charges, among other costs. You have to be careful with who you are dealing with.
Peer Lending Scams
Peer-to-peer lending is a fantastic financing option for businesses with bad credit. Scammers here use the same tactics as in upfront fee. The difference between the two is that in peer lending scam, the person lending funds solicit money from you, and not a phony business. You will also be asked for an upfront fee for your application to be approved, or for a background check. In this case, the scammers are asking for your details. If you are not careful, you will lose your funds as well as your identity. To be safer, only deal with a reputable lender. Avoid money wiring services such as a western union.
Funding Kit Scams
In some cases, online lenders make you believe it is so had to be approved for a business loan and want you to pay them for help. If you come across this trick, avoid it altogether. The scammers may offer to give you some essential tips for a successful application. But the reality is, all the necessary information that you need to be approved for a business loan is online. If there is any information that is not available online, you can still find the answer free of charge from legit lenders or a genuine loan broker.
Credit Repair Scams
Your credit report is essential when applying for a loan. Scammers try their best to steal from you with claims of helping you earn more points and eliminate poor credit report. This is a widespread scam in business credit repair and often targets new businesses. Even though there are legitimate credit repair organizations, they often don’t help so much. You can personally do all the things they offer by yourself. Avoid anyone who promises to increase your score overnight and stay away from anyone who demands an upfront fee to boost your score. It takes time to improve credit, and the best way to do that is by displaying financial discipline.
Debt Relief Scams
In this case, scammers target individuals who have difficulties with loan payments. They offer to lessen your payment up to half or even forgive the outstanding balance. They may ask for personal information as they claim to assess your current credit standing, and your account number to initiate the debt transfer process. You may as well be asked for an upfront fee. The right thing you can do if you are struggling with payments is to talk to your lender.
These are the most common business loans scams. To avoid being a victim of these scams, the following are the common red flags to pay attention to:
- Unsolicited Contact
If you receive an unexpected call, win a loan offer without you making an earlier contact that is a clear indication of a mess. It could be an indication of a scam you need to avoid.
- Non-Traditional Advertising
Legit lenders do not advertise via individual Facebook messages or through yard signs along the road. Do not fall for business loans marketed at the wrong places.
- No physical address
Legit lenders are supposed to indicate their physical addresses and contact information on their websites. If this information is lacking, avoid them.
- Guaranteed Approval
Legit lenders do not have such things as guaranteed approval. Your loan application must be received and reviewed before approval or rejection.
The Bottom Line
There are many business loan scammers ready to take advantage of the situation, especially if you have bad credit. We have discussed such scams and how you can take note of them. We have also discussed the common red flags you should never ignore. We hope this discussion has been helpful. Thank you!
