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 complied 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.
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 risk 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…
- Transfer money via Western Union
- Provide your lender with a pre-paid debit or credit card
- Give any amount of money to a lender requesting payments before you’ve received the full amount of your loan
What Will Happen?
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.
How to Deal With Being the Victim of a Loan Insurance Scam
If you’ve 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.
For more information on loan scams and how to prevent fraud:
- Watch our “How to Identify a Loan Scam” video
- Read our “How to Avoid Loan Scams” article
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