Car buyers with problem credit should stay away from lenders that require application fees for everything from personal loans to auto loans

We know loans

One way consumers with bad credit can tell if an offer to lend is legitimate is if the lender asks for a fee up front to process a car loan application.

At Auto Credit Express we're aware of this here because for the past twenty years we've been helping applicants with poor credit, searching for online car loans, locate those dealers that can give them their best opportunities at car loan approvals.

But the fact is that not all offers of credit car shoppers read about or may receive are legitimate.

Guaranteed loans

Looking for a guaranteed car loan or credit card but don't think you'll qualify? Turned down by a bank because of a less than perfect credit history?

According to the Federal Trade Commission, there is no such thing as a free lunch, and some ads could lead these folks to getting ripped off.

Credit and loan scams

Consumers with credit problems can be tempted by ads and websites that guarantee loans or credit cards, regardless of credit history. There is, however, a catch and it comes when applying for one and find out you have to pay a fee in advance. According to the Federal Trade Commission (FTC), that could be a "tip-off to a rip-off."

That's because if you're asked to pay a fee for the promise of a loan or credit card, you can count on the fact that you're dealing with a scam artist. In most cases, you'll end up with just a stored value or debit card, not a loan or credit card.

Advance-fee loan scam tips

According to the FTC, some red flags can tip you off to these scammers:

• A lender who isn't interested in your credit history. A lender may offer loans or credit cards for many purposes — for example, so a borrower can start a business or consolidate bill payments. But one who doesn't care about your credit record should give you cause for concern. Ads that say "Bad credit? No problem" or "We don't care about your past. You deserve a loan" or "Get money fast" or even "No hassle — guaranteed" often indicate a scam.

• 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. Scam lenders may say you've been approved for a loan, then call or email demanding a fee before you can get the money. Any up-front fee that the lender wants to collect before granting the loan is a cue to walk away, especially if you're told it's for "insurance," "processing," or just "paperwork."

Legitimate lenders often charge application, appraisal, or credit report fees. The differences? They disclose their fees clearly and prominently; they take their fees from the amount you borrow; and the fees usually are paid to the lender or broker after the loan is approved.

It's also a warning sign if a lender says they won't check your credit history, yet asks for your personal information, such as your Social Security number or bank account number. They may use your information to debit your bank account to pay a fee they're hiding.

The FTC also suggests that you watch out for:

• 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 uses a copy-cat or wanna-be name. Crooks give their companies names that sound like well-known or respected organizations and create websites that look slick. Some scam artists have pretended to be the Better Business Bureau or another reputable organization, and some even produce forged paperwork or pay people to pretend to be references. Always get a company's phone number from the phone book or directory assistance, and call to check they are who they say they are. Get a physical address, too: a company that advertises a PO Box as its address is one to check out with the appropriate authorities.

• 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. Checking registration does not guarantee that you will be happy with a lender, but it helps weed out the crooks.

• A lender who asks you to wire money or pay an individual. Don't make a payment for a loan or credit card directly to an individual; legitimate lenders don't ask anyone to do that. In addition, don't use a wire transfer service or send money orders for a loan. You have little recourse if there's a problem with a wire transaction, and legitimate lenders don't pressure their customers to wire funds.

Reporting scammers

If you think you've experienced an advance-fee loan scam, report it to the FTC. To file a complaint or to get free information on consumer issues, visit or call toll-free, 1-877-FTC-HELP.

As we see it

If you've experienced credit problems and have been turned down for a loan from a traditional lender, you need to be aware of these loan scams as well as the fact that there may be more options than a BHPH car dealer.

At Auto Credit Express we match applicants that have experienced car credit problems with dealers that can give them their best chances at approved car loans.

So if you're ready to reestablish your auto credit, you can begin now by filling out our online car loan application.