When money is tight, offers that promise “guaranteed approval” or “no credit check” can sound like a lifesaver. But one of the most common traps is the advance-fee loan scam: someone claims they can get you a loan (or “connect you to a lender”) if you pay a fee first. Once you pay, the “lender” disappears—and there’s no loan.
This guide explains how these scams work, the warning signs, and the fastest steps to protect yourself.
What is an advance-fee loan scam?
In an advance-fee loan scam, a scammer promises a loan, credit card, or access to credit regardless of your credit history, but insists you must pay up front for things like “processing,” “insurance,” or an “application.”
The key reality: there is no loan and no legitimate lender behind it—the fee is the whole point.
These scams often target people who have bad credit or who have recently searched or applied online for payday or other loans.
The biggest red flags to watch for
1) “Bad credit? Guaranteed approval!”
Scammers love ads that say you can get credit no matter your credit history, using phrases like “No hassle — guaranteed” or “We don’t care about your past.” Legitimate lenders don’t guarantee a loan before reviewing your information and assessing repayment ability.
2) They “approve” you… then reveal the fee
A common pattern is: “You’re approved!” followed by “Send money first to release the funds.” Any lender demanding an upfront payment before giving you the loan—especially for “insurance,” “processing,” or “paperwork”—is a strong sign to walk away.
3) Unexpected calls offering you a loan
If someone cold-calls you with a loan offer and demands upfront payment, that’s a major warning sign. The FTC notes it’s illegal for telemarketers to promise a loan and require upfront payment before delivering it (under the Telemarketing Sales Rule).
How to protect yourself (quick checklist)
If you’re unsure a lender is real, use these steps:
- Verify state registration/licensing. Lenders generally must be registered where they do business; check with your state attorney general or state financial regulator.
- Search the lender’s name + “review/complaint/scam.” Also search the phone number to see if others have flagged it.
- Hang up on robocalls. Recorded loan pitches are a red flag—hang up and report.
- Never pay for a promise. Requests to pay upfront for a loan offer (or for “debt relief,” “mortgage help,” or even a “job”) are classic scam territory.
- If you’re overwhelmed by debt, use legitimate help. Nonprofit credit counseling may be available at low cost or free.
If you already paid, act fast
Scammers often push payment methods that are hard to reverse—like cryptocurrency, wire transfers, or gift cards. The sooner you act, the better your chances of limiting losses.
Practical first moves:
- Contact your bank/wire service/card issuer immediately (time matters).
- Keep receipts, emails, phone numbers, and any messages as evidence.
- Don’t send “one more fee” to “unlock” your money—scammers often try to double-dip.
Report it
If you lost money (or have details about the scammer/company), report it through the FTC’s fraud reporting site, which helps authorities track patterns and warn others.