When you decide to take out a loan, in addition to getting the best rate possible, it's also important to make sure the lender is legitimate. The last thing you want is to apply for a personal or small business loan only to find out the company is sketchy at best or fraudulent at worst.
If you're not sure how to check if a loan company is legitimate, use these four easy steps below to research a loan company before taking out a loan.
Step 1: Verify their legitimacy
There are a few basic things you'll want to check about any loan company you're considering. Confirmation of the below elements will help you to ensure the company is not a scam.
- State registration - Lenders should present a list on their website of all the states in which they are licensed. If this information is not readily available online, seek out your appropriate state-level office, like the Secretary of State or Attorney General, to confirm the company's ability to do business.
Step 2: Check their reputation
It only takes a minute to do a quick google search to see what previous customers have to say about their experience with the loan companies you're considering. Sites like Yelp, Google, and Facebook collect reviews from consumers and share them online for free. The Better Business Bureau (BBB) is another trusted resource to look at customer reviews and complaints. The BBB can also help confirm the physical address of a lender based on the information you found in step one.
Step 3: Understand the process
Most lenders list rates and terms online that show a projected loan amount and interest rate if a borrower is approved. Any lender who guarantees loan approval, doesn't show interest in proof you can repay the loan or encourages you to act fast to lock in a particular rate should give you pause.
Step 4: Confirm their loan requirements
Legit loan companies will be upfront with fees and loan requirements. Companies that do charge fees will often deduct them from your loan amount instead of taking a payment from you. Any company requiring an applicant to pay money upfront before receiving a loan should set off major red flags.
If you get a bad feeling at any point during your research or begin to feel like a company may be taking advantage of you, it's best to walk away. Taking out a loan is a big decision and one that has the potential to impact your financial wellness for years. It's essential to do your due diligence before committing to a lender for a long-term relationship so that you don't have regrets down the line.
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Original Source: A 4-Step Guide to Researching a Loan Company Before You Take Out a Loan