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Avoiding scams
This a great moment to share with you one of the biggest scams in the book!
There are thousands of financing companies out there that represent themselves as “lenders.”. You might have heard the term “direct lender” before. Well, this term is used very loosely, and the reason why I say that is that when most people hear the word “direct lender,” they assume the finance company they are speaking to is the actual lender that is lending their own money or putting a lien on the collateral. That is definitely not true! The truth is, there are hundreds of financing companies out there and only so many actual lenders (lienholders) that lend their own money and place a lien on the equipment when it’s financed. It’s similar to the mortgage industry, where there are 100’s of mortgage brokers out there; however, there are only so many banks that hold the note. In a nutshell, all the finance companies go to the same banks (lienholders) to get customers credit approved.
It is extremely unfortunate that some financing companies engage in questionable practices.
I call it the “Send me your money” scam. The red flag on this scam is that once you have verbally agreed to the credit terms or a phony credit approval (that’s another scam), they will ask you to send them money before ordering your closing documents. Here are some of the more obvious lines they use:
- Please send me your “commitment fee.”
- Please send in your “consulting fee.”
- Please send me the “documentation fee.
- Please send in the “professional fee.”
- Please send me your “first payment.”
There is a pattern here, and it starts with, “Please send me your!”
No finance company worth even spending a minute of your time to work with will ever ask you for money upfront before you even get to read the contract. If you find yourself in this situation, run quickly in the other direction and find another company to work with.
