Life is getting harder. Prices are getting higher, opportunities are getting smaller, and the stress of it all is starting to catch up. Sadly, some take advantage of the situation and commit scams.
For one, auto loan scams are currently on the rise. While bad lenders have been around for some time, their tactics are evolving. If you are not careful, you can get scammed by a lender.
If you are looking for a new loan or a way to refinance an auto loan, you have to be aware of the modern scam tactics.
Common Types of Auto Loan Scams
There are two common types of loan scams that you have to look out for:
Phishing Scams – No, this is not a new spelling for catching fish. Phishing is a term for when a scammer tries to get your personal information. They have several ways to do this. For auto loan scams, they will ask you to fill out a form to process your application. Aside from that, they may ask for other requirements like your government ID.
Once you submit all of the documents, you will never hear from them again. They will use the information you provided to steal your identity and probably apply for a personal loan somewhere else using it.
Advanced Fee Scams – The other common scam is asking for money in advance, even before anything gets started. The reasons could be different. Some say it is to cover insurance or other payments. Others would say that it is a good faith payment. Regardless, that is a scam.
You are applying for a loan. That means you need money. Why would you give advance money? When a lender asks for money in advance, that usually is a scam.
Red Flags to Look Out For
Aside from upfront payment, there are three other red flags to look out for.
Excellent Terms – If it is too good to be true, it is probably a scam. One way scammers prey on people is by targeting their desperation. Seeing an excellent offer can cloud your better judgment.
Too Easy of a Loan Approval – Getting approved regardless of your background is a red flag. That means the scammer is only interested in getting your personal information or money.
The Form Is Not Secure – Most loan applications are made online. If the web page is not secure or does not start with an HTTPS://, that is a clear red flag. It is not worth the risk to continue.
How to Determine a Legit Lender
To know if a lender is legitimate or not, you can take these steps:
Check Their Online Presence – Do an online search of the company name of the lender. Use the news section tab for your search. That gives you a list of articles that mentions the company. You can use this to search if it is legitimate or not based on the news articles.
Some states require lenders to be registered. If you live in such a state, their registration information should be on the website.
Their website should also have the padlock icon near the address bar. That indicates that they have an updated security certificate.
Read Online Reviews – While you are already on the internet, take the time to see their online reviews. There are websites dedicated to providing user reviews. The first one you should start with is the Better Business Bureau.
The BBB is a non-profit organization that ensures all company reviews posted on its site are legitimate. They use the information gathered to provide a letter grade to the companies listed. Avoid working with companies that have an F for a grade. Look for those with A+.
Check With the State Attorney General – If you want to be entirely sure, you can contact the office of your state attorney general. They would often have information about lenders and brokers in their jurisdiction and can let you know if a particular company is legitimate.
Conclusion
Do not let scammers take advantage of your situation. Try to keep your head clear in deciding what lender to go with. If the lender seems sketchy or you have a bad feeling about them, listen to your gut. Ensure that the company is legitimate by taking the proper precautions. The steps above should help you.
Better yet, there are several known banks and lenders across the country. Shop around with them to find the best deal. At the very least, you know you are working with a trustworthy company.
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