Educational Consumer Tips
Author: Better Business Bureau
Advance fee loan brokers advertise in print and broadcast media that loans are available, regardless of credit history or collateral. These so called loan brokers don't lend money directly but, instead, claim to act as money finders. They ask for an advance fee, anywhere from $25 to $3,000 or more, to prepare a loan application and present it to prospective lenders.
An increasing number of companies advertise 900 numbers to call, enabling them to automatically collect a fee from a charge placed on the caller's telephone bill. Often, it is not clear that the fee is charged immediately, even before the would-be borrower receives loan information.
Despite a broker's assurances of unlimited loan sources from which to obtain capital to lend, including foreign sources, would-be borrowers should understand these companies cannot guarantee loans. In many cases, brokers have fraudulently pocketed the fees and made no effort to find the funds promised, leaving the financially strapped client in an even worse position. An individual in search of money not only doesn't receive the loan but also loses the advance fee paid to the broker.
Consumers in need of loans should ask themselves why an unknown, far-away lender is more likely to lend money through a broker than traditional sources close to home, especially if the consumer has been denied a loan because of credit problems. Would-be borrowers should be wary of a broker's assurances of unlimited loan sources.
To help detect fraudulent loan brokers, the BBB warns potential borrowers to be very wary of:
* loan ads displaying 900 numbers
* brokers claiming availability of foreign money
* any ad or broker that promises the easy availability of
thousands of dollars at low rates