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"E-Z" Loans Can Be Danger Zones
If you need a loan, choose the lender carefully. There are many lenders and con artists who take advantage of people who have bad credit, who are young and inexperienced, or who are older and have fallen on hard times. Their "No Credit? No Problem!" loans can come with very high interest rates and fees and have cost some consumers their homes.
Here are some types of loan offers you should be wary of:
It's always a red flag if a company asks for large application fees or deposits in advance, and especially if they want you to send it by courier or overnight mail. For any loan, you should request written information and review it carefully. All businesses offering loans in Maryland must be licensed with the Maryland Division of Financial Regulation. Call the Division at (410) 230-6097 to see if the company is licensed and if there are any complaints against it.
Home Equity Loans
Be wary of lenders you didn't contact first. Many unscrupulous mortgage brokers solicit by phone or door-to-door. Always shop around for the best loan rates. Check all fees, points, closing costs, terms of the loan and the monthly payment. Ask the lender for copies of the documents you'll be asked to sign, before closing. Ask a lawyer or trusted friend to go over the documents with you. Mortgage brokers should also be licensed by the Division of Financial Regulation.
Avoid lenders who encourage you to put false information on a mortgage application, such as saying your income is more than it is or hiding debts that you have. They may only be interested in making a profit from the sale, not getting you a mortgage you can afford. If you've had credit problems, ask for the free homeownership counseling offered by many community organizations. They can review your income, assets and credit rating to help you work on qualifying for an affordable mortgage.
The high cost of these cash advances eat away at your paychecks and make it likely you will need to borrow again. Some alternatives when you're short on money: Ask your creditors if they will accept partial payments from you. Ask your employer for a pay advance. Some community organizations or faith-based institutions offer emergency loans. Many credit unions offer their members small loans, lines of credit, and overdraft protection.
To prevent money shortages in the future, start a savings account. Ask if your employer offers automatic deductions from your paycheck to savings each pay. Even $10 per pay will add up. If you are continually short of money, you need some help in budgeting. See if you can get budget counseling from a local Consumer Credit Counseling Service. To find one near you, call 1-800-388-2227.
Check-cashing services can only charge up to 10 percent of the amount of your personal check, and the transaction cannot be renewed. Businesses that offer check cashing services must be licensed by the Division of Financial Regulation. If you have a question or complaint about such a service, call 410-230-6097.
Problems? Don't Give Up
Attorney General of Maryland 1 (888) 743-0023 toll-free / TDD: (410) 576-6372