Predatory loan scammers are everywhere, and they’d love to take advantage of people who don’t know any better. Here are ten ways to protect yourself.
#1. Never be in a hurry. Always take some time to look for alternative offers. and if the loaner is pressuring you to make a decision fast, just run away, period.
#2. Never sign a loan document that is blank or has fields that aren’t filled in. Also scan the contract for inaccurate information or vague terms. Ask questions about anything that needs clarifying.
#3. Be sure that the costs and terms are the same as they were at the beginning of the sales process. Don’t be lured in by advertising that tells you 10% interest, be talked up to 12% interest, and end up with a deal for 20% interest when the reputable lender had 17% interest advertised right across the street the whole time.
#4. Never be persuaded to lie about your income, expenses, or assets in order to get a loan. Don’t let a third-party lie for you. Don’t take advice about how all you have to do is “fudge the numbers”. When (not if) you get caught, you will be the one who is in trouble.
#5. Be careful about high-risk loans such as balloon payments, interest-only payments, or early-payment penalties. These catches can become a nightmare if they get out of control, particularly if they hinged on some valuable piece of collateral.
#7. Don’t strip your home’s equity. Refinancing again and again to spend the money on luxuries is just a way to live above your means while skating on the edge of disastrous debt.
#8. Always be on the watch for false appraisals. this is another version of a third party trying to convince you to lie about what your collateral property is worth. Once again, you will be the responsible party should the scheme backfire.
#9. Be sure you can repay the loan. This seems like it goes without saying, but many people fail to take into account what kinds of trouble can be started by missing a payment due to an unforeseen mishap such as hospitalization or losses from a fire or other disaster. Accidents happen, but the wrong timing can make things even worse on your when you have a loan payment hanging over your head.
#10. The best practice is to get at least three quotes from three different lenders. Compare not just interest rate, but timing and such details as whether payments are weekly, monthly, and so on.