Personal loan scam warning

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Mon, 13 Feb 2006

Britons are being warned against personal loan providers that require upfront fees.

National problem-solving charity Citizens Advice says many people pay upfront fees for personal loans that never materialise.

In some cases, arrangement fees are never returned and if the personal loan is received, it is often less than the agreed amount or it comes with a higher interest rate, the charity warns.

The charity points out that it is frequently those who are unable to get personal loans from regular channels, such as people with adverse credit problems or poor credit ratings, who are targeted by these personal loan providers.

Peter Tutton, social policy officer at Citizens Advice, says the problem is that once these "vulnerable individuals" have sent off the money that is requested upfront, it is very difficult to get it back.

"We want to see measures in the consumer credit bill to give people a way of putting things right if they get duped into paying for a loan they will never receive," he says.

People should be "very wary" if personal loan providers do not mention an upfront fee in an advertisement but then request it on application, according to Mr Tutton

"Avoid at all costs firms who ask for money up front," he concludes.

This advice comes at the start of Scams Awareness Month, a drive by the Office of Fair Trading to warn people about misleading and false mass-marketed scams.

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