Payday Loans and Advance Loan Scams

Posted By: Dr. Frugal in Loans on 06/27/2007 at 09:45:32

You need some cash now buy payday is a week away. You write a check for $375 to the payday loan company. They immediately write you a check for $300 and hold your check until next payday. Surprise! They keep that $75 as the fee: a ridiculous 25% interest rate for a TWO-WEEK loan. And the APR for that? That's right, over 500%. SCAM SCAM SCAM.

Advance loans are really no different in terms of being a scam but slightly different in how the money comes to you. They guarantee approval for a loan for ANY credit but require you to pay a fee before you apply. Most legitimate lenders won't guarantee ANYTHING until they've thoroughly reviewed your application and your credit history. Advance fee loans, big shocker here, are illegal. You'll never see the money. They'll simply collect your application fee. There are similar credit card scams--you pay a fee to apply for the card and then guess what, you never get a card. If you're not sure something is a scheme check out the FTC website to find out or look at one of the many consumer watchdog groups to find out for sure.

Comments

Posted by Matthew D. at January 18, 2009, 10:27 pm:

Because of what the economic crisis can bring to us that why there are many lending that they can cause fraud. People need help in times of hard life, and payday loans can be helping when people in need it. However, scams, con artists, and frauds of all sorts from coming out of the woodwork to prey upon people who are down. More scams, new and old, come out all the time, and it is during times like these when people have to be even more vigilant so that 2009 is a safer year. A lot of people are coming out posing as credit counselors to prey upon people that are looking to get out of debt. If a credit counselor wants you to pay a debt service fee up front, or if someone offers you a payday loan without up front approval for a fee, or a work from home service says you have to buy instructions or contact lists – these are all scams. Watch out for overpayment schemes as well, which are some of the worst of all. Check out this post to find out what an overpayment scam is, and to learn more about how payday loans can help instead of hurt.

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