When times are tough, people usually come up with ways to con hard working families out of their money. It’s unfortunate that people can’t spend this time more productively. Here are some financial traps aimed at your family and some tips to help avoid them.
Rent To Own (furniture and electronics)
On the surface it sounds like a good idea. You get a tv for a 50 a month when you would have to spend thousands of dollars at a store. The problem with this is if you add up your total payments, you wind up spending much more on that tv at the rent to own center than if you would have just saved the money and bought it at the store.
These loans also seem good on the surface. You don’t have to have good credit to qualify for one. They usually only want you to have a job and a checking account. The problem with these types of loans is that they usually have a high interest rate attached to them. Some people even fall prey to identity theft when they try to obtain a payday loan. Make sure you check a company out with the Better Business Bureau before you do business with them. Also be sure to do an Internet search on the company before you give them any personal information.
Car Title Loans
Basically a car title loan is a loan using the car as collateral. These loans usually don’t require a credit check. The problem with these loans is an incredibly high interest rate. These loans also usually have a short repayment time (usually 30 days). If you can’t repay the loan, you risk your car being repossessed. Make sure to read the fine print to see what other fees you may be paying and to see what the interest rate is.
Tax Refund Scams
These scams usually creep up at the beginning of the year when tax season starts. You may try to file your taxes electronically only to find that someone else has used your social security number on a tax return. You may find out that someone has used a family member’s social security number fraudulently. You may get overcharged by a tax preparation service. To avoid having these problems, don’t give your social security number or your kids’ social security number out to anyone you don’t know. If you are using a new tax preparation service, do some homework on them. Ask your network about them. Do a Google search about that company. If you find anything that doesn’t sound right, don’t do business with that company.
Student Loan Scams
These scams are especially bad because they prey on a family’s desire for their child to have a college education. One common scam involves companies saying that students need to pay an upfront fee in order to receive the loan. Another one is companies pretending to be official government sites in order to steal personal information.
It’s easy to fall prey to scammers. You have to be alert and pay attention to the people you do business with. Always read everything before you sign it. Always do research on companies before you do business with them. This may seem like being paranoid, but you will be protecting your family from being scammed.
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