When a Loan is Too Good to be True

You know how the old saying goes: if it is too good to be true it probably is.

Even though these words of wisdom are dancing around your head, it doesn’t mean you always listen to them. This is particularly true when it comes to financial decisions.

If you believe a loan is too good to be true, there is a very good chance it is. Not only that, but you could find yourself closer than ever to getting into a relationship with a loan shark. Is that a risk you want to take?

Here are three ways to tell if a loan is too good to be true:

  1. You are not asked to complete much paperwork. Let’s face it: traditional lenders require that you fill out quite a bit of paperwork, while providing a variety of documentation. If this is not asked of you, something is wrong.
  2. The lender is willing to give you as much money as you want. This should be a red flag, as most lenders will not hand over money just because you ask for it. You need to show that you are qualified. This is based largely on your financial standing, collateral, and credit score.
  3. You cannot find any information on the lender. A basic online search should help you learn more about a lender, including expert and consumer reviews. If you cannot find any of these, something is wrong. The lender is not legitimate, but may instead be considered a loan shark.

When a loan is too good to be true, it’s best to step back and understand what is going on. You may soon find that a loan shark is targeting you. Moving forward is a mistake on many levels. There are enough legitimate lenders that you don’t have to go down this path.

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