An origination fee should never be paid out of pocket. Some lenders charge an origination fee for their loans, but this will be deducted from your loan amount before you receive your loan funds. No legitimate lender will ask you to provide money at any point before it processes your application. If a lender asks you to provide an upfront fee for any reason, put the brakes on your application. If you're ever asked to pay a fee before receiving funds, enter personal information onto an unsecure website or offered a loan you didn't request, you might be facing a scam. Phone calls and social media messages are common ways for a scammer to contact potential victims. But certain clues, like a missing physical address, can be good ways to spot a fake loan. In general, loan scammers will present themselves like legitimate personal loan lenders. This is done either to gather information like your Social Security number or to convince you to pay for a product you won't receive. What are personal loan scams?Ī loan scam is a fraudulent offer for a personal loan. Like everyone says: If an offer too good to be true, then it's probably a scam. Because it can be difficult to tell a scam from a legit offer, make sure you know the warning signs and common red flags of a scam. The Federal Trade Commission (FTC) reported that consumers lost over $1.9 billion in 2019.