Navigating the loan market as a consumer can feel like you’re walking through a minefield of potentially bad decisions and scams. The problem with getting scammed on a loan is that victims can suffer a lifetime’s worth of debt consequences in “scams” that are just legal enough that the victims don’t have any real recourse.
One scam like this relates to “loan flipping.” The loan flipper will offer you a refinancing deal to get out of a high-interest loan. In order to sweeten the deal, he’ll offer you some extra cash. Then, after you start making payments, the lender will suggest refinancing again, with more extra cash. The high fees, costs and interest rates associated with the subsequent loan will be much higher than the extra cash received, but the lender won’t tell you that.
Another scam relates to phony loan transactions, where a lender offers to refinance your loan to help you avoid a home foreclosure. In the process of offering you the loan, the lender will require you to transfer part of the value of your home over the lending company. The lending company will include undisclosed interest-only payments, massive fees, ballooning payments and penalties that end up costing you an arm and a leg.
If you’ve been victimized by a loan scam, or if the company that issued a loan to you didn’t fully explain its terms in a way that you understood, you may want to learn more about how the law supports victims of loan scams to seek justice. You may also want to learn more about the Chapter 7 bankruptcy process as a way of helping you quickly get out of debt fast.
Source: Forbes, “Seven Foreclosure Scams to Watch Out For,” Pooja Dave, accessed May 04, 2018