If the pandemic has put you under financial pressure and you’re considering taking out a loan, we have some important information to share with you about advance fee loans. We’re going to tell you what they are and some red flags to watch out for.
Upfront fees on loans are illegal
What if you need a loan but have bad credit? Would you jump at the opportunity if a loan broker offered to secure a loan for you and all you had to do was give them $50 upfront?
Sounds too good to be true, doesn’t it? According to the Canadian Anti-Fraud Centre, it’s actually illegal for a company to request an upfront fee prior to obtaining your loan.
Here are some tips from the Financial Consumer Agency of Canada about advance fee loans and some red flags to watch out for:
- Don’t pay upfront. Legitimate lenders don’t usually ask for advance fees.
- Don’t fall for promises that you’ll get a loan regardless of your credit problems. If you have poor credit or haven’t established a good credit history yet, it’s unlikely that anyone will lend you money without charging large fees.
- Be cautious about emails offering to help you get a loan. Many unsolicited emails are scams.
If you have paid for an advance fee loan and suspect that you have been scammed, report your concerns to your local police and the Canadian Anti-Fraud Centre at 1-888-495-8501. We hope this information is useful to you!
About Consumer Protection BC
We are responsible for regulating specific industries and certain consumer transactions in British Columbia. If your concern is captured under the laws we enforce, we will use the tools at our disposal to assist you. If we can’t help you directly, we will be happy to provide you with as much information as possible. Depending on your concern, another organization may be the ones to speak to; other times, court or legal assistance may be the best option. Explore our website at www.consumerprotectionbc.ca.