Greg's Corner

Don’t pay advance fees for loans

By Greg Collier

There are certain business you shouldn’t use if they solicit your business through email. One of those businesses is that of the online lender. These supposed lenders claim they’ll lend you thousands of dollars that they’ll get to you in no time flat. They may also claim that no credit check is needed, or that they’re not like the big banks when it comes to lending.

If someone were to take one of these lenders up on their offer, a number of things could happen, and none of them are good. You could have your personal and financial information stolen, or you could be victim to a predatory lender with exorbitant interest rates. Think along the lines of those payday loan stores. However, the most common scam when it comes to online loans is the advance fee scam.

Typically, when we talk about the advance fee scam, we’re talking about phony sweepstakes that scammers say their victims have one. Then the scammers ask for payment to cover taxes or processing fees. Scammers will keep asking for payments as long as they can keep the victim on the hook. Meanwhile, there are no sweepstakes that the victim won.

This recently happened with a loan to a man in Arkansas who was looking to make some improvements to his home. He applied for some loans online before getting an email from a supposed lender. The lender promised that could get the money to his bank account in 15 minutes. All the man needed to do was pay them $200 in gift cards. After the man paid the initial $200, he was asked to pay another $200. He did, and still did not receive his loan. It was at this point the man realized he had been scammed.

Legitimate lenders will never ask for payment in advance. They make their money through interest once the loan is paid back and not through outlandish fees. That’s not even considering no legitimate bank or financial institution will accept gift cards as payment.