How to Avoid Unscrupulous Bad Credit Loan Brokers

Seeking approval for a bad credit loan, particularly a home loan can be very difficult if you have bad credit.  If you are in the same situation, you may consider getting assistance from a mortgage loan broker.

A mortgage loan broker is a specialist in the field of mortgage lending and will  be able to help you find a suitable lender to finance your home purchase.  Aside from getting approved, a broker can assist in getting you the best possible rate despite your poor credit rating.

bad credit personal loansNevertheless, consumers must watch out against unscrupulous bad credit loan brokers.  Who are these people and how can you avoid dealing with one?  Check out the rest of this article to find out.

Signs of Unscrupulous Bad Credit Loan Brokers

Irresistible Offer.

We see this a lot in the car loan industry.  A dishonest broker may trick you by offering you  loan at a very tempting offer – one that’s hard to resist.  For instance, you may be offered an incredibly low interest rate, a low down payment, and an instant approval despite your bad credit.  What’s the catch?

As soon as you sign your loan documents, and take your new car home, that’s when things can get ugly.  You are now in love with your new car, taking your friends and family out in it and then you get the call.  The  original bank that had approved your loan backed out.  (YEAH RIGHT!)  But don’t despair !  Your oh so helpful car salesman stayed  up all night calling all his contacts for you and found a bank to finance you!  Oh JOY!  But not at the 4% rate they originally offered you.  Its only 19% and you get to keep the car you are driving around in and loving so much.  Or you can come back to the dealership and pick up your old clunker.  What do you do? Many people choose to to keep the car and the much higher interest rate.  Were they ever approved for that first loan?  Its doubtful.  But once someone gets behind that wheel and start enjoying their new car, its unlikely they will return it.  So many dishonest brokers use this tactic.

Instant Approval.

Watch out for brokers who guarantee your loan’s approval without going through the standard validation process.  If a lender is willing to grant approval without first considering the risks, you have every reason to doubt the motive behind it.

For instance, lenders who provide bad credit home loans do conduct income verification or require permanent employment from a potential borrower.  To make up for your bad credit history, you need must be able to show proof that you are capable of repayment, especially since mortgage is a long term debt.

There are guaranteed approval credit cards, but most of these are secured credit cards (bank requires a security deposit ) or they are credit cards that only allow you to buy merchandise from their catalog.

Miscellaneous Fees.

If a broker demands upfront fees without a guarantee of approval for a personal loan walk away.    There are some loan products that require the broker to do a lot of research, such as some equity based business loans.  But in general a personal  just requires a broker to pull your credit and analyze your debt to income ratio.  They may have an application fee, but they should disclose that before you apply.

Never sign a loan application without examining the Terms and Conditions yourself.   Make sure you clearly understand all rates and fees.  Check the broker’s background and credentials before hiring their assistance.

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Elizabeth Roberts

Elizabeth Roberts

Liz Roberts and her team are continuously providing information to people who are ready to repair their credit and improve their credit score. Also NewHorizon.org team strives to empower the homebased and small business owners by bringing information that can help them to manage and grow their businesses. Let our 24+ years of business finance experience help you to get the financing you need! CONTACT US if need financing for your business.

1 Comment
  1. Waoo this is great. I will always make it a point of duty to check the above listed signs before engaging any credit loan broker.

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NHBS Inc © 2022

NewHorizon.org is an independent, advertising supported website. The owner of the site may be compensated in exchange for featured placement of certain sponsored products and services, or your clicking on links posted on this website. NewHorizon.org has not reviewed all available credit card offers in the marketplace.

Privacy Policy Terms of Use

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