For a great number of us, financial hardship is, or was, an inevitability and a reality, and sometimes our credit score just isn’t good enough. There are vendors out there that make very attractive promises, which speak directly to our weakness of wanting something, but not having the money for it. But if something is too good to be true, then it probably is. Here are some signs of a potentially bad loan being offered to you.
Warning Signs of a Bad Loan
Your first warning sign should be if the vendor tells you to fabricate or falsify information on your loan application. There should be absolutely no reason to be deceitful or hide any details, and the more truthful you are about your need to borrow money (or other resources), the less likely you will be to make your situation worse for yourself. A dishonest vendor might stress that one little lie won’t hurt, but that’s just him (or her) trying to get you to sign your money over to him (or her).
Similarly, if a vendor asks for money upfront, that’s a red flag. A small, application fee is a different issue entirely, but if a vendor wants you to pay them first before any business can be done, all they’re trying to do is bleed you dry. They might say that the payment is collateral or premiums, but it is illegal in the United States to charge upfront for a loan.
Anything that seems to offer a quick fix – “No credit? No problem!”, or instant approval – is just a trap waiting to be sprung by someone desperate for help, and who hasn’t done their homework on how to notice the signs of bad loans, and avoid them.
How To Avoid A Bad Loan
One way to avoid all the scammers and loan predators out there is to take things into your own hands and repair your credit yourself. This is, obviously, the harder route, but it is the safest and the most rewarding. Pay off your debts and avoid taking on fresh loans that stretch your finances beyond what they are, and in particular your ability to pay that loan back.
Other ways you can avoid taking out bad loans are by doing research, asking questions and asking around. If a vendor offers you a deal that seems fishy, ask people you trust. Go online and see if people have had similar experiences, and what those stories are. Shop around, and see what other vendors are offering. Use those frames of references to decide if the original offer you received was reasonable, or suspicious.