Has a lender you were hoping to get an unsecured loan from asked you to pay loan insurance, up-front before you’ve even received your money? Unfortunately, this is a scam, one that we’re seeing more and more of. When the economy is less than great and people start to feel the pinch, scammers tend to come out of the woodwork to prey upon people in desperate financial situations.
To help you avoid these scammers and make sure that you never fall victim to one of their fraudulent loan insurance plans, we’ve compiled all the information you need to know about this scam so you can be prepared to deal with these scammers should you ever become a target.
Click here for more information about how Loans Canada is dealing with loan scams.
Here’s how a loan insurance scam tends to play out. You’ll get in contact with a loan company who offers you everything that you want, same day approval, thousands of dollars more than you expected, low-interest rates and a reasonable payment plan. What’s not to like? You’ll get the money you need with all the benefits you only dreamed of.
Then you’ll be asked to pay for loan insurance. These scammers have a variety of different lies to tell you as to why loan insurance is required, but typically the reason will have something to do with alleviating some of the risks for the “lender”. The amount they’ll ask for will range anywhere from a couple hundred dollars to a thousand dollars. And you’ll be asked to transfer the money to them via a Western Union online transfer or a pre-paid debit or credit card.
Remember that these scammers can be extremely convincing and will try to convince you that loan insurance is an industry standard and that no matter what loan company you work with you’ll be asked to provide loan insurance. This is, of course, a lie, no reputable lender or loan company will ever ask you to transfer them any amount of money before they’ve even given you your loan. Under no circumstances should you ever…
It’s crucial that you understand that these scammers are trying to take your money and once they do that you will never hear from them again. If you send money to someone via Western Union, a pre-paid card of any kind or something similar, it is extremely difficult if not impossible to reverse the transaction. This is the exact reason why they ask for the “loan insurance” to be transferred to them via one of these methods. These forms of payment aren’t regulated in the same way that other forms of payment are and therefore are the perfect way to scam someone out of their hard earned money.
If you think you’re the victim of a loan insurance scam, it’s imperative that you get in contact with both your local police and the Canadian Anti-Fraud Centre. Furthermore, if you have provided you with online banking information to a “lender”, please get in contact with your bank right away.
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Caitlin Wood is the Editor-in-Chief at Loans Canada and specializes in personal finance. She is a graduate of Dawson College and Concordia University and has been working in the personal finance industry for over eight years. Caitlin has covered various subjects such as debt, credit, and loans. Her work has been published on Zoocasa, GoDaddy, and deBanked. She believes that education and knowledge are the two most important factors in the creation of healthy financial habits. She also believes that openly discussing money and credit, and the responsibilities that come with them can lead to better decisions and a greater sense of financial security.
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All consultations and conversations with Loans Canada and its partners are confidential and risk-free. Speak with a trusted specialist today and see how we can help you achieve your financial goals faster. Loans Canada and its partners will never ask you for an upfront fee, deposit or insurance payments on a loan. Loans Canada is not a mortgage broker and does not arrange mortgage loans or any other type of financial service.
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