Loan Companies

Check the legitimacy of a company before you borrow a loan

Bad credit score, unstable income and bankruptcy history now hardly matter while applying for a loan. There are plenty of loan companies available these days and you can solve your entire monetary problem with a blink of eyes with such companies. Sometimes the situation is so urgent that you even don’t have time to bother about the company’s background to apply for the loan. Although there are legitimate companies, yet the number of illegitimate companies is much higher than the legitimate ones.

It is always suggested to check on the loan companies with which you’re dealing for urgent loans. The tempting ads and websites related to loans draw the attention of people, especially who have bad credit score. As a result, people often become the victim of fraudulent transaction when they are in dire need of money.

Tips for you to crack the legitimacy of loan companies

So, here are few tips which will help you in distinguishing between legitimate and illegitimate loan companies and check if the loan company is really genuine.

  • Check the physical address - Before dealing with any Loan company make sure you check the physical address of the company. If you don’t find a street address, instead there is a P.O. Box address, then keep your ears and eyes open. However, to make this thing more evident, check the address on the Google Maps. This will give you a clear picture of the company’s existence.

  • Check the phone number - After the address, the next thing you need to check on is the phone number of the loan companies. Dial the available number and if you get the sound of an automated touchstone system instead of the voice of any real person, then keep yourself away from such a company. There are also companies that don’t provide any phone number at all. A genuine company has representatives who are there to answer the queries of the customers.

  • Check BBB accreditation – Check whether or not the company is accredited by Better Business Bureau (BBB). It is simply the best option to check the legitimacy of a loan company. So, make sure you work with a BBB accredited loan company.

  • Check company’s reputation - If any company has a history of scams, you will come to know about it by visiting the websites like Ripoff Report and Consumer Affairs. A database of complaints regarding the company will be provided to you. This way you will be able to track the scams and fraudulent activities related to different loan companies and can erase them from your preference list.

  • Browse the Internet - Just type the name of the company on your favorite search engine and watch out for information provided. You may also find the views of people who might have dealt with the company and their experiences, both good and bad.

  • Consult with an attorney - An experienced attorney who deals such matters may give you a clear hint about the legality of the terms and conditions offered by different loan companies. This would, to a great extent, help you in deciding if the company is authentic.

These were few tips which you can follow on your part to check the legitimacy of the loan companies. This will be of great help to you as you will be able to filter out few names from your list of preferred companies.

Few signs from FTC to keep you alert

Here is a list of signs of fake loan companies. As per Federal Trade Commission (FTC), the points mentioned below are red flagged. A customer must check them to avoid being the victim of a fake loan company.

  • No interest in your credit history: Loans are offered these days by many small and big companies for various reasons. Generally, a lender wants to know about the credit score, but if you find them showing least interest in your credit profile, it is suspicious and you need to stay alert.

  • Undisclosed fees: Many Loan companies assure you that your loan has been sanctioned and all you need to do is to pay a fee of minimal amount. Make sure that you don’t fall prey to this system. At the same time, there are other legitimate companies who ask for fees, but they get it deducted from the loan they offer. Make sure you don’t leak any information regarding your bank account number, social security number etc. before checking the legitimacy of a company; otherwise your bank account may be used to pay a hidden fee.

  • Phone loan: Never believe on phone calls from loan companies as this process is illegal in USA. They may ask for fees before delivering the loan. So, don’t get entangled into such a hassle.

  • Unregistered lender in the state: As per rule, lenders and loan brokers must register in the state where their business resides. So, this make you job easier as you can call the state Attorney General’s office and state’s Department of Banking and Financial Regulation to check if your preferred company is registered. This way, you would be able to distinguish between genuine and fake companies easily.

In a nutshell, be very careful while dealing with loan companies. Don’t fall prey to their slick promotion and tempting ads on newspaper, radio, television or internet. The crooks these days are smarter than you think and are ready to fool you at every possible step. So, before involving in any money matter with a loan company make sure that you follow all the above mentioned points and stay alert.

How to Get A Loan from Loan Companies

Getting a loan can be a straightforward process if you follow these steps:

Step 1: Determine Your Needs and Loan Type

  • Identify the purpose of the loan: personal, mortgage, auto, etc.
  • Understand the type of loan that suits your needs best.

Step 2: Check Your Credit Score

  • Obtain your credit report from a credit bureau.
  • Verify your credit score and review the report for any errors.

Step 3: Research and Compare Lenders

  • Look for lenders that offer the type of loan you need.
  • Compare interest rates, terms, and fees.

Step 4: Gather Required Documentation

  • Prepare essential documents such as ID proof, income proof, bank statements, and any other documents requested by the lender.

Step 5: Apply for the Loan

  • Fill out the loan application form accurately.
  • Submit the application along with the required documents either online or at the lender’s office.

Step 6: Wait for Approval

  • The lender will review your application and creditworthiness.
  • You may need to provide additional information or documents if requested.

Step 7: Review Loan Terms

  • Carefully read the loan agreement.
  • Pay attention to the interest rate, repayment schedule, and any penalties.

Step 8: Accept the Loan

  • If satisfied with the terms, sign the loan agreement.
  • The funds will be disbursed to your account as per the lender’s process.

2. Key Insights

Understanding the loan process and being aware of potential pitfalls can save you time, money, and stress. Here are some key insights:

Importance of Credit Score

  • A good credit score can significantly impact the interest rate you receive.
  • Regularly monitoring your credit score can help you identify and rectify any issues.

Hidden Fees and Charges

  • Always inquire about any hidden fees or charges associated with the loan.
  • Understand the total cost of the loan, not just the interest rate.

Repayment Flexibility

  • Look for loans that offer flexible repayment options.
  • Check if the lender allows early repayment without penalties.

Legitimacy of Lenders

  • Verify the lender’s credentials and read customer reviews.
  • Use resources like the Better Business Bureau (BBB) to check for any complaints or fraudulent activities.

Loan Terms and Conditions

  • Thoroughly review the terms and conditions of the loan agreement.
  • Seek clarification on any points you do not understand before signing.

3. FAQ

Q1: What is the minimum credit score required to get a loan?

  • The minimum credit score varies by lender and loan type. Generally, a score above 650 is considered favorable, but some lenders offer loans to those with lower scores.

Q2: Can I get a loan if I have a bad credit score?

  • Yes, some lenders specialize in providing loans to individuals with bad credit. However, these loans may come with higher interest rates and stricter terms.

Q3: How long does it take to get a loan approved?

  • The approval time can range from a few hours to several days, depending on the lender and the type of loan. Online lenders typically offer quicker approval times.

Q4: What documents do I need to apply for a loan?

  • Commonly required documents include proof of identity, income proof, bank statements, and credit reports. Specific requirements may vary by lender.

Q5: What is the difference between a secured and an unsecured loan?

  • A secured loan requires collateral (e.g., a car or house), whereas an unsecured loan does not. Secured loans generally have lower interest rates due to the reduced risk for the lender.

Q6: Can I repay my loan early?

  • Many lenders allow early repayment, but some may charge a prepayment penalty. It’s important to check the loan terms regarding early repayment.

Q7: How do I know if a loan company is legitimate?

  • Verify the company’s physical address and contact information.
  • Check for BBB accreditation and read reviews on consumer protection websites like Ripoff Report and Consumer Affairs.

Q8: What should I do if my loan application is denied?

  • Ask the lender for the reason behind the denial.
  • Work on improving your credit score and financial profile before reapplying.
  • Consider applying with a co-signer or looking for alternative lenders.

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