7 Warning Signs of Personal Loan Scams

Loan scams trap more than a million Americans
every year with a loss of over $900 million. In this video, I’ll not only show you the
seven warning signs of a loan scam, I’ll reveal the two most common scams that cost
you money. We’re talking online loan scams today on
Let’s Talk Money! Beat debt. Make money. Make your money work for you. Creating the financial future you deserve. Let’s Talk Money. Joseph Hogue with the Let’s Talk Money channel
here on YouTube. I want to send a special shout out to everyone
in the community, thank you for taking a little of your time to be here today. If you’re not part of the community yet,
just click that little red subscribe button. It’s free and you’ll never miss an episode. Something I haven’t shared on the channel
yet is how the Great Recession destroyed my credit and finances. I was leveraged to the hilt and saw it all
fall apart when housing tanked in 2008. My credit score was shit and I couldn’t
get a loan to save my life. Now that’s another video but how I was able
to recover was through a personal loan to consolidate the debt. It helped me get back on my feet. So I’ve been sharing mine and other people’s
experience on the blogs since 2013 but every story I’ve shared hasn’t always been a
happy ending. In fact, the most popular post on one of my
blogs, PeerFinance101, is about the personal loan scams I’ve seen…and that post has
74 comments from people and their experiences with online scams. Readers like Christine that have been scammed
not once but three times by different companies. Or Carol that shares her experience with one
of the most common loan scams, one that I’ll show you in this video. This is Important! Whether you’re planning on getting a loan
or not, watch this video because it could save you thousands someday. Besides the money it will save you, it could
save your finances, your credit score and your sanity. I’m going to start with just a quick explanation
of what are personal loans and why you might need one someday. Then I’ll reveal those seven warning signs
that you’re being scammed online with examples of real-life scams. Finally, I’ll show you how to tell if an
online loan company is legit so stick around to the end of the video. Again, even if you don’t need a personal
loan now, write these warning signs down because this affects everyone. The Federal Trade Commission received more
than 1.1 million fraud reports last year with over $900 million in fraud losses. So a personal loan is simply an unsecured
loan you get from a traditional bank or online lender. Unsecured means you don’t have to put up
your house or car as collateral and you can use the money for whatever you like. The average rate on personal loans is around
14% so this isn’t something you use for casual spending but that’s still below the
18% average rate on credit cards so about two-in-three loans are taken out to pay off
card debt. Another upside is that the online lenders
usually have lower credit score requirements than traditional banks so you can usually
get one of these loans even after your FICO falls like mine did in the recession. But you can imagine attracting borrowers that
have nowhere else to turn, this brings out the scammers, the loan sharks and the hackers. Almost a trillion dollars a year is stolen
from people through fake loan promises and scam sites. Like a lot of things online, the regulators
just don’t have the resources to watch everything that happens so a lot of these scams just
won’t die. But there are warning signs you can watch
for, hints that will tip you off to a scam before losing your money. The first warning sign you should watch for
is promises of no credit check loans. Now I know these sound great, get a loan even
with bad credit because the lender doesn’t even check your FICO score. Understand though that legit lenders are in
the business of charging a fair interest rate depending on the risk in a loan. The only way they know the risk is by checking
your credit report and score so if they’re promising you money without doing this, you’ve
got one of two things. You’re either going to get a super-high
interest rate, we’re talking 35% a year or higher. At this rate, even if a lot of those loans
aren’t repaid, the lender is going to make money. But a lot of these no credit loans are just
outright scams. They’re going to rope you in with that promise
then drain your bank account before you know what’s happening. The next warning sign, and this is where most
of the scams make their money, is with upfront fees or collateral. No legit personal loan site will ever charge
you an upfront fee before you get your loan. Most charge an origination fee which is taken
out of the loan before it hits your bank account but that’s only once you’ve gotten the
loan. Now this might be worded as an application
fee or a processing fee or whatever. Think about it though, lenders are in the
business of processing loan applications and making loans, why would a legit lender charge
you a fee for the possibility of making money off your loan? Please do not pay a fee to an online lender. I’m linking to a few loan sites I’ve used
in the description below the video, some that don’t even charge origination fees. Even if the loan site seems legit, there’s
no reason to pay any fees upfront. The third warning sign, and this one is probably
the best for spotting scammers, is an unregistered lender. All lenders, even online ones, must register
in each state where they want to do business. This is usually through the State Attorney
General’s office or with a special state banking regulator so check online for your
state. The state regulator examines applications
for fraud companies and also takes complaints so this is a great resource to check anytime
a lender comes to you to offer a loan. Four more warning signs before I reveal the
two most common scams and how to tell if a lender is legit. Another big warning sign is when the lender
shows no physical address on the website or in emails. The FTC spam-act requires that all emails
from a business must include a physical address somewhere on the page. Now, this can be a PO Box but it still has
to be listed and something you can check. Even if the address on the company’s website
or in emails is a PO Box, you can still check to make sure the company is actually registered
in that state. This is an easy one that will catch most scammers. They either won’t list their address or
if they list a fake address, they won’t take the time to register the business in
the state. Number five here and probably the most common
warning sign to a loan scam is emails out of nowhere. It always amazes me how spam email catches
so many people every year. Any stranger offering you a commission, bonus
or any money in an email is 99.9% of the time a scam. Ask yourself, why are they contacting me and
not someone with experience in this kind of thing. These email scams happen in personal loans
as well. You receive an email with a loan offer and
a rate that is too good to turn down…along with a link where you can supply your personal
information. The way most of these work is the link in
that email gives the scammers access to your computer through some kind of virus or malware. You click on the link, get that virus on your
computer and you’ve just had your identity stolen. Never click on a link or open an attachment
in an email from someone you don’t know. If it’s from a lender or company, go directly
to their website instead of clicking on the link in the email. This next warning sign would be a fun one
if so many people weren’t losing thousands a year to scammers. We’re talking about misspellings and bad
grammar in emails. A lot of these loan scams are coming from
outside the United States and it’s hilarious how bad their English is sometimes. This is an actual email I got from a scammer
and I counted at least three spelling mistakes. Beyond the spelling, you can also spot these
by a weird greeting like just using ‘Dear’ or ‘Honorable Sir’ or word choice that
just doesn’t sound right. The seventh warning sign, and this will catch
99% of the scams even if you don’t see other warnings, is to look at the email sender’s
address. When you send an email from a business account
or website, the back half of the email usually includes the name of the site, right? So when someone from PayPal sends an email
to you, the address is the person’s name @Paypal or when I send an email from my blog,
it’s @peerfinance101.com Look at that email I got, supposedly from
PayPal though, and the address is from @uthscsa.edu which is weird in itself but definitely not
from PayPal. A lot of times these fraud emails will have
a Hotmail or Gmail address because scammers can set these up anonymously without any identity
proof or tracking. Always double check where an email is coming
from before you even consider reading it. I’m going to reveal two of the most common
loan scams I see online but I want to get your feedback on this. The best resource we’ve had is people sharing
their experience with these to out the scammers and their methods so scroll down and share
your story in the comments below. If you’ve ever gotten a weird email that
seemed like a scam or have a question, scroll down and tell us in the comments. One of the most common loan scams is called
a phishing campaign. This is where the scammer will send out thousands
of emails with a link in it to confirm your bank account login or supposedly to verify
something. A lot of times, they’ll even disguise this
as helping you avoid a problem. So the email will supposedly be from your
bank and will say it found a suspicious login to your account. It will then say to click the link to confirm
that it wasn’t you. Again, when you click on that link or open
an attachment, it downloads a secret virus or code onto your computer that gives the
hackers access. If you get one of these emails and you’re
not sure if it’s legit, just go directly to the company to its website. Don’t click on the email, just do a Google
search or type in your browser to go to the website and call their customer support. The next type of scam, and this one is probably
the one I see people get caught up in most often, is a bank wire scam. The scammer tells you it will verify your
bank account with a wire transfer before they give you a loan. Once the wire is sent, you’re supposed to
send the money back through an ACH payment or something. Remember Carol? This is what happened to her. She withdrew the money that was wired to her
account and sent it back to the company. Even though the wire transfer shows on your
account, it’s never completed because the sender’s account doesn’t have funds. What happens here is your account is never
credited with the wired money but you don’t know that until it’s too late. You withdraw and send that verification money
back before the wire is cancelled and you’re out a few hundred bucks. After all these warning signs and examples,
you probably are ready to swear off personal loans completely, but they can be a good resource
when you need the money. I couldn’t have fixed my finances in 2009
without consolidating my debt and there are legit lenders out there. So I want to share four quick ways to find
legit online loans and make sure a company is for real. First, always visit a lender’s website directly. Never click through an email or a Facebook
message. Do a Google search for the company or type
the name into your browser. Avoid no credit check loans and never pay
an upfront fee. You can get a loan even on bad credit and
your rate is going to be lower with that credit check. Make sure you check to see that a lender is
registered in your state and check for a physical address in any email or on the website. In fact, just ignore any emails from lenders
that you didn’t already apply to. If you didn’t fill out an application, how
did they get your email address? Why are they just spamming out to everyone
offering them a loan? I’ll tell you, 99% of the time it’s coming
from scammers. Before applying for a loan, click through
to this video on the right and five credit score hacks to boost your FICO 100 points
fast. You’ll get a lower rate and save thousands
in interest. Don’t forget to join the Let’s Talk Money
community by tapping that subscribe button and clicking the bell notification.

14 comments on “7 Warning Signs of Personal Loan Scams”

  1. Passive Income Tom says:

    I've been hit with a few scams. The company will promise ridiculous guarantees well over 20%. I kind of knew it was a scam and only used money I knew I could afford to lose. Thanks for sharing this message Joseph! 👍

  2. Sarah Johnson says:

    I have friends whom are homeless because of scams. Smh i was scammed but it was $200. Yes it hurt because i was starting over. This why i respect Mr. Jordan aka the Wolf of Wall Street; he reveals how one does what he is trained to do. Its especially effective if the individual person or animal identifies his or her own gifts.

  3. GenExDividendInvestor says:

    I think the Google search tip is one (beyond the others) that you really need to make sure you do. See if it has various 3rd party reviews, do they advertise online on legitimate sites, what does the BBB say, etc. Anything that is too good to be true is too good to be true.

  4. Bud Tugly says:

    I just looked at adding solar to my house. The total price was 62500 but the loan was suicide. The loan offered was 3.99% for the loan amortized out 25 years comes out to 98866.00 but it was an adjustable rate loan requiring a prepayment of 20,000.00 before the 18 month mark or it adjusts up to 18% amortized at 25 years is 284,518.00 for a solar system that estimates a savings of 171,000 over 25 years of electric bills makeing the electric company 113,518.00 cheaper than solar over 25 years. I checked the BBB for complaints and found 79 major complaints against the lender and some complaints were that people paid off their loans but could not get the lien removed from their homes as the lender would not respond. Bad, bad, bad no solar for me thank you.

  5. Sarah Johnson says:

    T. Lopez was correct in his observation of 3 types of people in the world:

  6. Wolf of Dubai Stocks Investing Channel says:

    The more important message to give would be:

    Don’t take a personal loan for any consumables like holiday, nice clothes, status symbols etc.

  7. BigMad Starr says:

    All very good points! Also use some sort of malware & virus blockers, where possible, to mitigate risk of something being installed on your system.

  8. Let's Talk Money! with Joseph Hogue, CFA says:

    Must Watch! Check out these five credit score hacks I used to boost my score 100 points fast! 😮 https://youtu.be/QYR06s7KcCQ

  9. Jack Buchanan - F.I.R.E. and Personal Finance says:

    Best way to avoid personal loan scams is avoid debt all together. Would much rather work a side hustle or save a bit more than go into debt. That being said these are great strategies for reducing your risk and making the debt work for you. Good stuff as always Joseph!

  10. blackmagick77 says:

    The best scam attempt on me was a call from someone saying they were from the IRS and they have deactivated my SSN because someone was trying to steal my identity. I told her cool if my SSN is deactivated that means I don't have to pay taxes right?
    Thanks for this video! Always have good content but this will help a lot.

  11. Tim Crowe says:

    I already know all this but still a good video.

  12. Just Frugal Me says:

    You made great points and tips in this video! Thanks for sharing

  13. Sam Tha Man Escamilla says:


  14. Ramsbams yolo says:

    i have a blog on linkedin , can you help me with this blog? Need a million-dollar loan or know someone who does.

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