A consumer recently posted this story on our forums, detailing her near-miss with a “bad credit loan” offer:

I was contacted about being approved for a $65,000 loan which I was receiving from "private lenders" because the banks turned me down. Because I'm high risk, I need to give the first 3 months up front. He really pushes the wire transfer (for the first three payments)...

After I got home, I saw the Credit.com news letter about loan scams and knew that this was one...

I have not given this thief any money and thank credit.com for the heads up and research tools.

This is one of the positive stories we’ve heard from people who have avoided advance fee loan scams. Others are not so lucky. We’ve heard after the fact from consumers who lost hundreds, or thousands of dollars, to these low-life “lenders” who will steal the very last dime of desperate borrowers.

Before you give money to an Internet lender who promises to give you a loan regardless of your credit rating, please come to the Credit.com forums and read the real-life stories!

The FTC also offers some tips for avoiding advance fee loan scams. Here’s a brief summary. Tip offs that may be dealing with a scamster:

• A lender who isn’t interested in your credit history. Banks and other legitimate lenders generally evaluate creditworthiness and confirm the information in an application before they guarantee firm offers of credit — even to creditworthy consumers.

• Fees that are not disclosed clearly or prominently. Unless you are dealing with a reputable, secured credit card issuer, an upfront fee that the lender wants to collect before granting the loan can be a cue to walk away, especially if you’re told it’s for “insurance,” “processing,” or just “paperwork.”

• A loan that is offered by phone. It is illegal for companies doing business in the U.S. by phone to promise you a loan and ask you to pay for it before they deliver.

• A lender who is not registered in your state. Lenders and loan brokers are required to register in the states where they do business. To check registration, call your state Attorney General’s office or your state’s Department of Banking or Financial Regulation. 

• A lender who asks you to wire money or pay an individual. Don’t use a wire transfer service or send money orders for a loan!

I’ll add another tip: Check out the domain name registration for the company. You’ll often find the website is registered overseas, anonymously, or has recently been established. If so, investigate carefully.

Please be careful. I'd like to hear your success story about how you avoided a rip-off, rather than read about how you've been taken.

Gerri Detweiler – Personal finance author and Credit Advisor for Credit.com, Gerri contributes budgeting, debt recovery and savings information online. She is also the co-author of Reduce Debt, Reduce Stress: Real Life Solutions for Solving Your Credit Crisis.