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Pioneer Blog

Personal Loan Scams

Posted on August 14, 2018

A personal loan could save you in an emergency situation, like a visit to the ER or replacement of a major household appliance. But loan scams are increasing, and personal loans are an easy target. Staying well-informed and knowing the red flags could protect you from these pitfalls.

Choose Your Financial Institution Wisely

At Pioneer, we pride ourselves on establishing lifelong partnerships with our members. A strong lending history helps us meet our members' needs with great offers. In exchange, members can protect themselves from loan scams by obtaining a personal loan from the financial institution they know and trust. Never provide personal financial information to any institution you don't know or for which you haven't done a proper risk assessment.

Credit History

A trustworthy financial institution wants to know you will pay your loan back on time, and will almost always check your credit report for your credit score and payment history information. A lender who is willing to offer a loan without verifying credit worthiness is a sure red flag! Obtaining a loan from an institution that boasts "Poor Credit, No Problem!" poses a major risk to you.

Undisclosed Fees

The Truth in Lending Act requires that financial institutions fully disclose the principle, interest, and any attached fees on a loan with initiation of the loan application. Scam lenders may request personal information from  you and approve a loan, but later request fee payments not previously disclosed before releasing the funds. Even worse, some scammers may only be out to collect your personal information and sell it to the highest bidder!

Loans Offered from Out-of-State, by Phone, or Remote Means Only

The Federal Trade Commission requires financial institutions to register in the state in which they do business. If a financial institution does not have a physical address or state of business listed, steer clear. Additionally, a lender without a secure website is a sure sign of a scam lender.

Pressure to Act Immediately

This one may be tricky to identify, so be cautious. Financial institutions often have limited-time promotions or time period restrictions. For example, some offer 30 days within which an application must be completed to ensure the credit report is still valid. The worst that can happen is that you miss the promotional period or need to submit a new application. There should never be any pressure to act immediately or "you'll lose" an offer outside these parameters. Scam lenders often resort to hard selling tactics to pressure you into making a quick decision without considering the risks.

Sketchy Loan Initiation

Legitimate lenders will initiate a loan and accept coupon book payments, direct transfers from your savings or checking account, automatic withdrawals, or monthly payments. They will not require cash payments up front. You should never have to pay to get a personal loan, so if there is a request to wire money, send a cashier's check, get a pre-paid debit card, or payment to a particular person, run the other way!

Request for Personal Banking Information

Pioneer will never ask for your online banking login credentials, and you should never give this information to any institution or person! Giving someone else your online banking information gives them access to all of your account information as well as transaction capabilities like transferring money out of your account. This also makes you extremely vulnerable to fraud and identity theft.

Let Us Help!

If you ever find yourself in a sticky situation and need assistance, you can always reach out to Pioneer for help. Our team can assist you in identifying scams and find products and services that best meet your financial needs.

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