Advance Fee Loan Offers Should Never be Considered to Consolidate Debt

More people today are using credit than ever before. When used responsibly credit can be a helpful financial tool, but if abused it can cause large debts and ruin a person’s credit rating. Before making a credit purchase or applying for a loan a person should establish a legitimate need for credit and then determine if the payment will fit comfortably within a budget. The next component of using credit responsibly is to locate the best loan available. Many people in this "shopping" phase are faced with companies offering advance fee loans. Is this loan offer a good option for legitimate credit use such as debt consolidation? The simple answer is no. An advance fee offer guarantees a loan or line of credit in exchange for an up front fee. This is a scam! The companies will take your money and give you nothing in return. And even if they did follow through with their guarantee to provide a loan (which they won’t) it is illegal to ask for money in exchange for a promise of approval.

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• Legitimate lenders will not ask for money in order to guarantee a loan or a line of credit. In fact legitimate lenders will not make guarantees concerning loan or credit card approvals under any circumstances.

• A lender should never ask for payment if you do not have a written copy of the offer.

• Be wary if a lender begins asking for sensitive information such as account numbers or social security numbers.

• Advance fee loan scam offers often appear in newspapers. This in itself does not indict a loan offer but be aware that this is one of their preferred media outlets.

It is not enough to diligently create a budget and to exercise careful judgment before determining to apply for a loan or other forms of credit. Those things are certainly essential but the final step should always be to use an equal amount of diligence in choosing the proper loan. Failure to do so can prevent you from receiving your much needed loan and in its place you may end up with some fresh new debt. Be alert and don’t let yourself become the victim of a financial scam.

Mark Carney is a professional consultant with First American Debt Consolidation and Loans, a debt consolidation service specializing in financial education, credit counseling, and debt management services nationwide.