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Scams & Schemes: Loan And Credit Schemes Can Cost You

Advance fee loans, credit repair schemes and zero percent financing could all be hazardous to your financial health, according to the Attorney General.

Credit repair schemes offer the opportunity to improve your credit rating, even if you have declared bankruptcy. But these schemes only add insult to injury. If you have credit problems, credit repair can't be bought. Lifestyle changes, time and good financial advice will help improve your credit situation.

Advance fee loans are often advertised as "cash loans --- guaranteed." Con artists know how to hook people when they are vulnerable. Advance fee loan scams tend to target unemployed persons, people with poor credit and businesses trying to stay afloat. First you may be offered a loan, but you must pay an advance of $50 to $500 for "processing" or "application" fees. After you send the money, the company is never to be heard from again. You have no loan and you don't get a refund.

Protect yourself when it comes to loan brokers and credit repair schemes. Don't pay any fees up front. Be careful about making loan agreements over the phone. Review all materials in writing before you sign anything. Don't give your credit card, checking account, other bank accounts or Social Security numbers over the telephone. Always deal with a reputable financial institution.

Zero percent financing also has some attention-getting tactics: "no interest and no payments until 2008." There is a catch: hidden costs or conditions may eliminate any advantages of so-called no-interest payment plans.

Many zero interest offers do not require you to pay interest for a specified period, perhaps six months. But you must pay for the product in full by that date or you will be charged for interest on the entire purchase dating back to the actual purchase date. This detail is often included in the papers a consumer signs, but many don't notice it.

If you decide to purchase an item on zero interest financing, get more information about the offer, beyond the ad headlines. Check the fine print for details on restrictions, payment terms and payment deadlines. And always check the bottom-line price for an item that has a zero interest plan and one that doesn't. You might find a better price from a retailer that doesn't offer a complicated financing plan.

This information is brought to you by the Attorney General's Office.

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