Tenants can have problems to obtain finance especially when they have bad credit or no credit at all. Therefore they are the perfect niche for non traditional lenders. However, many people fear non traditional lenders and try to obtain financing through regular banks and well known financial institutions. Those with bad credit most of the time do so unsuccessfully. Is the fear of non traditional lenders justified?

Unfortunately, I don’t have a straightforward answer to that question. Of course, with traditional lenders and banks you can be confident that they are registered with the proper authorities and that they have the proper licenses to do business in the states where they are stationed. However, truth is that all lenders are obliged to obtain the licenses and to abide the regulations that rule the business.

 

Non Traditional Unsecured Loan Lenders

Non traditional lenders are less known, new or small financial institutions that offer unsecured loans for people with all kind of credit. These lenders take higher risks when lending to people with a poor credit situation and thus, charge higher interest rates in return to cover themselves and of course, to obtain some sort of profit from the transaction too. These lenders also have to be licensed to do business in order to lend money.

What people fear from non traditional lenders is that they are not well known and thus, they could as easily be posers and not an actual lender. There are many scams out there and those who are tenants and cannot obtain secured financing are sometimes forced to resort to unsecured loan lenders. Though regular banks and financial institutions offer unsecured loans too, tenants cannot always qualify for financing with these institutions.

 

How To Make Out a Scammer From a Legitimate Lender?

Since what people fear is to fall prey of a scammer, it is important to know how to distinguish one from a legitimate non traditional lender. The first thing you need to understand is that as explained above, legitimate lenders need also to register with the authorities and thus, you can request the lender when you contact them all the information regarding this registration. State authorities can provide you with certainty regarding the lenders’ legitimacy.

Another important point to note is that no lender is authorized to request money in advance for a loan whether it is as security, as advanced insurance payment or any other concept. There is no such thing as money upfront for a loan, nor security deposit, nor three installments in advance, etc. A lender that requests money in exchange for a loan is obviously not a legitimate lender.

Only a broker may charge a fee for helping you locate a lender and a loan that suits your needs. But you should never be required to pay a fee for an actual loan. Moreover, the amounts that brokers charge for their services are usually small while scammers request hundreds and sometimes thousands of dollars in advance and request the money to be sent by Western Union, MoneyGram or other almost untraceable payment methods.