A Poor Credit Loan Possibility

“Bad credit, good credit, or even claimed bankruptcy, we are here to help.”  Sound familiar for a poor credit loan?  You probably read it in a newspaper ad or heard it on TV.  Be sure to investigate the offer thoroughly, as a “pay up front” poor credit loan for poor credit borrowers and credit cards have become the biggest scam in America these days.

A poor credit loan can be obtained through legitimate credit providers.  However, telemarketers set up in Canada, where laws are less strict and international prosecution causes many challenges to the authorities that be, and target Americans looking for a poor credit loan..

Let’s say that you are having credit problems.  Perhaps you’ve been laid off, recently divorced, or have simply fallen behind on your bills.  You receive a phone call from a telemarketer about a poor credit loan (unaware they are calling from Canada) with an offer for a low-interest credit card or to get a poor credit loan “for a small fee”.  The interest rate being offered is much lower than any of your current credit cards, so you sit through the pain-staking process of questioning (lasting 15-45 minutes) and give your bank information to pay the small fee (usually around $100-200).

But you never receive your card or check.  The fee is debited from your account, and you spend more money trying to get a refund (lawyers, international calls).  According to the FTC (Federal Trade Commission), millions of Americans have had the same experience, these scams bilking an estimated $100 million from Americans yearly.

According to the FTC, charging a fee up front for a poor credit loan is illegal in the United States, meaning the first warning flag should be the offer of a low-interest loan for a poor credit holder for a “small fee”.  If you should receive a call or see an ad in the newspaper, get the contact information and turn it in to authorities.  Most victims never report the scam, which allows continued operation.

When looking for a poor credit loan, you are in danger of becoming a target for predatory lenders, bad loans, and illegal practices.  There are many signs you should look out in order to protect yourself for when applying for credit or any kind of loan if you have a history of poor credit.

The biggest warning sign of a predatory lender is that they do not require verification of the borrower’s ability to repay the loan. Application for a poor credit loan will be an excuse to charge outrageous fees, exorbitant interest rates, and will repeatedly refinance with hidden payments (like balloon payments) that the borrower will not be able to pay.

Beware of illegal practices as well.  Although it is perfectly legal to raise the interest rate on a poor credit loan or credit card offered to those with poor credit, be sure that the interest rate offered does not exceed any caps that your state may have placed on rates to prevent unfairness.  In reference to home mortgage or refinancing loans, there are several regulations (if the interest rate is more than 10% over the Treasury securities of the same maturity), including prohibition of balloon payment arrangements, default or penalty rates (higher rates charged should you fall behind on payments), and prepayment penalties.

Other warning signs of a poor credit loan offer for those with who want a poor credit loan include high closing costs, up front fees (often considered illegal), telephone or door-to-door solicitation offers, offers from unlicensed lenders, and requirement of the borrower to purchase a credit life or disability insurance policy.

A Poor Credit Loan

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