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Starting a payday loan business – Business – Jamaica Gleaner …

Personal Financial Advisor, OranHall

I am about to open a payday loan business and I am asking for your advice and suggestions. I would be very happy to hear from you.

– Desrene

FINANCIAL ADVISER: There is no full-fledged regulation of the payday loan business. Commercial banks and credit unions which grant such loans are regulated by the Bank of Jamaica, but there are many other players in the payday loan business and they are not regulated.

You seem to be interested in setting up an informal payday loan business, but you should note that such businesses will soon be regulated.

My first suggestion is that you register your business at the Companies Office of Jamaica and treat it as a serious enterprise. Select a reliable and reputable group of persons to serve as its board of directors. If you can find persons with expertise in the credit business and with the ability to give time and add value to your business, invite them to serve as directors.

Ensure that your business is adequately capitalised. You will need financial resources to meet the daily expenses of running your business and, importantly, to lend to your customers so that the business can make money.

Businesses take time to make money and it is easier to make them strong if profits are reinvested. Pay yourself a salary rather than withdraw money to meet your expenses. Remember that you are running a business.

The Money Lending Act requires that businesses such as the kind you want to set up lend at a maximum rate of 40 per cent per annum, but many informal operators pay no attention to this requirement sometimes charging way above that rate. Where the rate is to be exceeded, it is required by law that an application be made to the Ministry of Finance for an exemption.

market-driven rates

You will find, though, that rates are market-driven, so you must be aware of the rates charged by your competitors – and there are many. You may use the add-on or reducing balance method to determine how interest is determined. In fairness to the borrower, it makes sense to also state the annual percentage rate.

This will help the consumer to better understand the real cost of the loan and to be in a better position to compare rates.

Make sure that you use a contract that spells out very clearly the terms and conditions of each transaction. Once signed, the contract binds both parties. Seek legal assistance to draft the contract if necessary.

Be fair to the consumer. Avoid loosely adding processing fees and other charges which increase the cost to the unsuspecting borrower. Bear in mind that lending rates are as high as they are due to the risk to which the lender is exposed.

But you must protect your own interest. Some lenders give unsecured loans; others do not. A good, tight contract is one way to protect yourself and your business.

Additionally, limit your business to employees of reputable organisations and to individuals who have worked with their current employer for a minimum period of six months, for example. Set upper and lower loan limits. Pay attention to the quality of the guarantor and the collateral.

Pay attention to the quality of your customer. Some lenders do this by requiring that prospective customers provide the following: a valid government-issued identification, proof of address, their TRN, three recent pay slips, a job letter, a statement of account from the bank and personal references. It is up to you to decide how far you will go in confirming who your client is.

It is one thing to get customers. It is quite another to keep them and to get referrals from them to grow your business. Keep your part of the contract and give service above the customer’s expectations.

Charge reasonable rates and focus on the long-term viability of your business. If you get things right now, it will be much easier for you when the business is regulated.

Oran A. Hall, principal author of ‘The Handbook of Personal Financial Planning’, offers free personal financial planning advice and


Bad Credit? No Problem. Here's How to Get a Home Loan


Image Source: Images Money

You’ve found the house . You have the savings for a down payment and the cash flow in your budget to afford the payments. Everything is great, except for one thing: Your credit score is bad. Is this a death knell for your home purchase?

Maybe. But then again, maybe not. Here are the best strategies and tactics you can follow to overcome that credit score and buy the house in spite of it.

What is a bad credit score?
Generally speaking, credit scores break down as follows:

760+ Excellent 710-760 Good 650-709 Average 620-649 Below Average Below 620 Poor

There are tons of different reasons a credit score could fall; however, moving into that below average or poor range takes a pretty serious event like several missed payments, bankruptcies, foreclosures, or collection accounts. But don’t worry… life happens to even the best people, and a missed payment in the past is not the end of your home buying journey.

A bad credit score simply indicates to a bank that you’ve had trouble repaying debts in the past. To overcome that history, you must take extra steps to prove to the bank that history won’t repeat itself. To do this, you must think like a bank.

How to think like a bank
Banks care first and foremost about getting repaid. That means you must prove to the bank that the loan will be repaid. Remember, as we work through these concepts, you probably won’t have every “i” dotted and “t” crossed. That’s OK. At the end, we will bring it all together with a solution for the worst-case scenario.

Question 1 : How are you going to repay the loan?
Typically, the answer to this question is through your monthly cash flow. This is the income from your job after you subtract your living expenses like food, water, electricity, debt, etc. Banks use a ratio called the debt-to-income ratio to determine if your monthly cash flow is sufficient to afford the debt. The ratio is calculated by dividing your total monthly debt payments into your total monthly income (before taxes).

Image Source: Images Money .

For borrowers with good credit, a 40%-50% debt-to-income ratio is typically enough to qualify for the loan. For those with credit problems, this ratio needs to be much less.

Question 2 : If that doesn’t work out, what is the backup plan?
What happens if you lose your job? That could be the reason your credit score isn’t the best in the first place. The reality is that this can happen and, when it does, both bank and borrower feel the financial pressure. That’s why banks always look for a backup plan.

Do you have any savings or cash hidden under the mattress? Banks will want to see enough savings to cover your living expenses and debt payments for at least six months. The more savings, the better.

Image Source: Images Money

It gives the bank comfort that, if something goes wrong, you, your family, and the bank will all be financially stable until you can find another income source.

Question 3: What happens if your backup plan fails?
It may seem like overkill, but banks want a backup plan for the backup plan. When all else fails, the bank wants to make sure that if the house must be sold, the loan will be repaid. Unfortunately, this often means foreclosure.

To you, that means a bigger down payment. By putting in more of your money up front, it creates breathing room for the loan if it must be sold quickly. If a conventional mortgage requires a 20% down payment, try to put down 30%, 40%, or more.

You may be thinking, “Why should my family put in more money now just so the bank won’t lose money later?” Well, if you don’t do this, you most likely won’t get the loan. And if you accept the loan, you’re giving your word that you’ll repay the debt. As long as you pay the monthly payments as you’ve agreed to do, you have nothing to worry about.

Putting down a bigger down payment will benefit you by lowering the monthly payment, as well, making it less likely that you’ll ever be in the worst-case scenario in the first place. Even further, it gives you more leeway to sell the house yourself prior to foreclosure, saving your credit score from further damage in the future.

Again, the idea with all of these considerations is that, because your credit score is low, you need to prove beyond a shadow of a doubt that you can and will repay the loan.

The worst-case scenario
What if you’ve worked hard, saved up, dotted your “i’s” and crossed your “t’s,” but the bank still won’t approve your loan? You have the cash flow, the savings, and the down payment, but you still get declined for a conventional mortgage?

At this point, it’s time to look at subprime options. Subprime is a kind of dirty word in the post-financial crisis world; but that doesn’t mean it’s not a viable solution for many families.

Image Source: Images Money

With a subprime loan, the specialized banks and lenders mitigate the perceived risks of a loan by charging a substantially higher interest rate. They lower their lending standards so that you can get the money you need. The higher interest rate is, in essence, the bank charging more for lowering those standards.

The subprime loan will be much more expensive, but at least you’re able to get the financing you need to buy the home. Over time, as your credit score improves, you should be able to refinance that subprime loan into a conventional loan with a better rate.

Take advantage of this little-known tax ;”loophole”
Recent tax increases ;have affected nearly every American taxpayer. But with the right planning, you can take steps to take control of your taxes and potentially even lower your tax bill. In our brand-new special report, ” The IRS Is Daring You to Make This Investment Now! ,” you’ll learn about the simple strategy ;to take advantage of a little-known IRS rule. Don’t miss out on ;advice that could help ;you cut taxes for decades to come. Click here ;to learn more.

The article Bad Credit? No Problem. Here’s How to Get a Home Loan originally appeared on

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Millennials Prefer Plastic to Cash for Small Purchases

If your cup of coffee is less than $5, chances are you’re going to pull out cash to pay for it – unless you’re a millennial. Then you’re more likely to whip out plastic, regardless of how big or small your purchase is.

According to a recent survey by, cash has long been king when it comes to small purchases (under $5). Overall, about two-thirds of credit card-carrying Americans pay for small purchases with cash, 22 percent use debit cards and 11 percent use credit cards.

But the younger generation is helping to change those figures. said:

The generational divide is striking. A slight majority (51 percent) of consumers 18-29 prefer plastic to cash, the only age group to do so. A preference for cash becomes stronger in each advancing age bracket, until at age 65-plus, 82 percent prefer cash.

Financial experts say paying with plastic isn’t bad. But millennials are using debit over credit by a near 3-to-1 ratio. Debit cards offer fewer protections for consumers. Plus, they don’t help build credit.

Both offer solid protection from fraud in case your card is lost or stolen, particularly if you report the disappearance in a timely fashion. However, Matt Schulz, senior industry analyst for, told MarketWatch:

“If your debit card information gets stolen, somebody can take real money out of your account that you won’t be able to use to make a car payment or a doctor’s bill,” Schulz says. “That money may be gone for a week or two.”

Some people opt to pay with a debit card because they’re trying to be money-conscious, limiting their purchases to money they have. Bloomberg Businessweek said:

Debit cards work a lot like cash because the money comes straight out of a checking account. A credit card is more complicated. It can be a better choice than a debit card if you pay off your card in full each month because you get what amounts to an interest-free loan and rewards points to boot.

Other survey findings include:

Got kids? Parents are more likely (41 percent) to use cards to pay for purchases under $5 than people without kids (30 percent). As a parent, I usually don’t have enough free hands to fiddle with change, so using a card is easier. College-educated are comfortable with plastic. Americans who have graduated or attended college use plastic twice as often (39 percent) to pay for small purchases than their counterparts who haven’t attended college (22 percent). Politically, we’re on the same page (about one thing, at least) . When it comes to paying for a small purchase, 30 percent of Democrats and 28 percent of Republicans prefer plastic to cash.

I rarely carry cash. But if I have it on hand, I use cash to pay for small purchases.

Do you use cash, credit or debit to pay for small purchases? Share your comments below or on our Facebook page.

This article was originally published on as ‘Millennials Prefer Plastic to Cash for Small Purchases’.

Banking & BudgetingEmployment & Careercredit cardsdebit cards […]

United Security Bancshares, Inc. Declares Cash Dividend


United Security Bancshares, Inc. (USBI) announced today that the Board of Directors, at a meeting held earlier today, declared a quarterly cash dividend of $0.01 per share. The dividend is payable October 1, 2014, to shareholders of record at the close of business on September 12, 2014.

“Our Board of Directors is pleased to resume paying a quarterly cash dividend to our shareholders,” stated James F. House, President and CEO of United Security Bancshares, Inc. “We will continue to evaluate any future dividend payments so that they will be consistent with maintaining our strong capital base,” concluded Mr. House.

About United Security Bancshares, Inc.

United Security Bancshares, Inc. is a bank holding company that operates nineteen banking offices in Alabama through First United Security Bank. In addition, the Company’s operations include Acceptance Loan Company, Inc., a consumer loan company, and FUSB Reinsurance, Inc., an underwriter of credit life and credit accident and health insurance policies sold to the Bank’s and ALC’s consumer loan customers. The Company’s stock is traded on the Nasdaq Capital Market under the symbol “USBI.”

Forward-Looking Statements

This press release contains forward-looking statements, as defined by federal securities laws. Statements contained in this press release that are not historical facts are forward-looking statements. These statements may address issues that involve significant risks, uncertainties, estimates and assumptions made by management. USBI undertakes no obligation to update these statements following the date of this press release, except as required by law. In addition, USBI, through its senior management, may make from time to time forward-looking public statements concerning the matters described herein. Such forward-looking statements are necessarily estimates reflecting the best judgment of USBI’s senior management based upon current information and involve a number of risks and uncertainties. Certain factors that could affect the accuracy of such forward-looking statements are identified in the public filings made by USBI with the Securities and Exchange Commission, and forward-looking statements contained in this press release or in other public statements of USBI or its senior management should be considered in light of those factors. Specifically, with respect to statements relating to loan demand, growth and earnings potential and the adequacy of the allowance for loan losses for USBI, these factors include, but are not limited to, the rate of growth (or lack thereof) in the economy, the relative strength and weakness in the consumer and commercial credit sectors and in the real estate markets and collateral values. There can be no assurance that such factors or other factors will not affect the accuracy of such forward-looking statements.

FinanceInvestment & Company Information Contact:

United Security Bancshares, Inc.
Thomas S. Elley, 334-636-5424


Fitch Affirms GT Loan Financing I, Ltd.'s Ratings


Fitch Ratings has affirmed the class A notes issued by GT Loan Financing I, Ltd. (GT Loan I) at ‘AAAsf’. The Rating Outlook remains Stable.


The affirmation is based on the stable performance of the underlying portfolio since Fitch’s last review and the stable credit enhancement available to the notes. As of the July 14, 2014 trustee report, the transaction continues to pass all of its coverage tests and collateral quality tests, and there are currently no defaults in the underlying portfolio.

The loan portfolio par amount plus principal cash is approximately $191 million, compared to the effective date target balance of $190 million. The minimum required weighted average spread (WAS) trigger is 4.0%, versus a current WAS of 4.4%, as reported by the trustee. Additionally, the weighted average rating factor is at ‘B/B-‘, in line with the level at closing. Fitch considers 2.6% of the collateral assets to be rated in the ‘CCC’ category versus 6.2% at closing, based on Fitch’s Issuer Default Rating (IDR) Equivalency Map. Currently, 94.3% of the portfolio has strong recovery prospects or a Fitch-assigned Recovery Rating of ‘RR2’ or higher.

The Stable Outlook reflects the expectation that the class A notes have a sufficient level of credit protection to withstand potential deterioration in the credit quality of the portfolio, based on the results of the Fitch sensitivity analysis described below.


The ratings of the notes may be sensitive to the following: asset defaults, portfolio migration, including assets being downgraded to ‘CCC’, portions of the portfolio being placed on Rating Watch Negative, overcollateralization (OC) or interest coverage (IC) test breaches, or breach of concentration limitations or portfolio quality covenants. Fitch conducted rating sensitivity analysis on the closing date of GT Loan I, incorporating increased levels of defaults and reduced levels of recovery rates, among other sensitivities.

GT Loan Financing I, Ltd. (the issuer) is an arbitrage cash flow collateralized loan obligation (CLO) that is managed by GoldenTree Asset Management, LP (GoldenTree). Net proceeds from the issuance of the secured and subordinated notes were used to purchase a portfolio of approximately $190 million of primarily senior secured leveraged loans. The CLO has a four-year reinvestment period, ending in October 2017.

This review was conducted under the framework described in the report ‘Global Rating Criteria for Corporate CDOs’ using the Portfolio Credit Model (PCM) for projecting future default and recovery levels for the underlying portfolio. Given the stable performance of the deal since closing in September 2013, no updated cash flow modeling was completed. The WAS, WAL, and PCM outputs are similar to the levels at closing. The current portfolio’s ‘AAAsf’ Rating Default Rate (RDR) and Rating Recovery Rate (RRR) outputs from PCM are 53.6% and 39.4%, respectively, versus an RDR of 63.9% and RRR of 35.2% for the Fitch stressed portfolio at closing.

Initial Key Rating Drivers and Rating Sensitivity are further described in the New Issue Report published on Oct. 22, 2013. A comparison of the transaction’s Representations, Warranties, and Enforcement Mechanisms (RW&Es) to those of typical RW&Es for that asset class is also available by accessing the reports and links indicated below.

Fitch has affirmed the following ratings:

–$110,000,000 class A notes ‘AAAsf’; Outlook Stable;

Fitch does not rate the class B, C, or the Subordinated Notes.

Additional information is available at ‘‘.

Applicable Criteria & Related Research:

–‘Global Structured Finance Rating Criteria’ (August 4, 2014);

–‘Global Rating Criteria for Corporate CDOs’ (July 25, 2014);

–‘Counterparty Criteria for Structured Finance and Covered Bonds’ (May 14, 2014);

–‘GT Loan Financing I, Ltd. New Issue Report’ (Oct. 22, 2013);

–‘GT Loan Financing I, Ltd. – Appendix’ (Oct. 22, 2013).

Applicable Criteria and Related Research:

GT Loan Financing I, Ltd.

GT Loan Financing I, Ltd. – Appendix

Counterparty Criteria for Structured Finance and Covered Bonds

Global Rating Criteria for Corporate CDOs

Global Structured Finance Rating Criteria

Additional Disclosure

Solicitation Status


Security Upgrades & DowngradesFinanceFitch Ratings Contact:

Fitch Ratings

Primary Surveillance Analyst

Shashi Srikantan



Fitch Ratings, Inc.

33 Whitehall Street

New York, NY 10004


Committee Chairperson

Derek Miller

Senior Director



Media Relations

Sandro Scenga, New York, +1-212-908-0278 […]

Fitch Affirms SLM Student Loan Trust 2004-4 Ratings


Fitch Ratings has affirmed the senior and subordinate notes for SLM Student Loan Trust 2004-4 at ‘AAAsf’. The Rating Outlook remains Stable for all classes.


High Collateral Quality: The trust collateral consists of 100% of Federal Family Education Loan Program (FFELP) loans. The credit quality of the trust collateral is high, in Fitch’s opinion, based on the guarantees provided by the transaction’s eligible guarantors and reinsurance provided by the U.S. Department of Education (ED) for at least 97% of principal and accrued interest. Fitch currently rates the U.S. sovereign at ‘AAA’ with a Stable Outlook.

Sufficient Credit Enhancement: Credit Enhancement is provided by overcollateralization (OC; the excess of trust’s asset balance over bond balance) and excess spread. In addition, the class A notes benefit from subordination from the class B notes. As of June 2014, Fitch’s calculated senior and total parity, which include the reserve account are 219.47% and 105.86%, respectively. In addition, the current pool factor is 6.1%, below the 10% pool factor and as such all notes must be paid in full prior to any cash release.

Adequate Liquidity Support: Liquidity support is provided by a reserve account. The reserve is sized equal to the greater of 0.25% of the pool balance, and $4,509,772.

Acceptable Servicing Capabilities: Navient Solutions, Inc. (formerly known as Sallie Mae, Inc.), as servicer, will be responsible for servicing the portfolio. Fitch has reviewed the servicing operations of Navient Solutions and believes it to be acceptable servicer of FFELP student loans.


Since FFELP student loan ABS rely on the U.S. government to reimburse defaults, ‘AAAsf’ FFELP ABS ratings will likely move in tandem with the ‘AAA’ U.S. sovereign rating. Aside from the U.S. sovereign rating, defaults and basis risk account for the majority of the risk embedded in FFELP student loan transactions. Additional defaults and basis shock beyond Fitch’s published stresses could result in future downgrades. Likewise, a buildup of credit enhancement driven by positive excess spread given favorable basis factor conditions could lead to future upgrades.

Fitch has affirmed the following:

SLM Student Loan Trust Series 2004-4:

–Class A-4 at ‘AAAsf’; Outlook Stable;

–Class B at ‘AAAsf’; Outlook Stable.

Additional information is available at ‘‘.

Applicable Criteria and Related Research:

–‘Global Structured Finance Rating Criteria’ (May 20, 2014);

–‘Rating U.S. Federal Family Education Loan Program Student Loan ABS Criteria’ (June 23, 2014).

Applicable Criteria and Related Research:

Global Structured Finance Rating Criteria

Rating U.S. Federal Family Education Loan Program Student Loan ABS Criteria

Additional Disclosure

Solicitation Status


Security Upgrades & DowngradesFinanceFitch RatingsFFELP Contact:

Fitch Ratings, Inc.

Primary Analyst

Autumn Mascio, +1-212-908-0896


Fitch Ratings, Inc.

33 Whitehall St.

New York, NY 10004


Committee Chairperson

Tracy Wan, +1-212-908-9171

Senior Director


Media Relations

Alyssa Castelli, +1-212-908-0540 […]

??? Full Report – Thinking About Payday Loans? Use These Tips!

Have you heard of a loan called a payday loan? If so, then you’ve probably wondered if this loan is worth it. Payday advances often advertise as being easy to obtain, whether you have good credit or not. You will be able to make smart choices regarding a payday loan, with the information provided in this article. Continue reading to learn about cash advances.

When applying for cash advance loans, make sure you pay them back as soon as they’re due. Never extend them. Every extension is only going to leave you further in debt.

Before you get a payday loan, make sure you understand all the charges that come along with one. It can be shocking to see the rates some companies charge for a loan. It’s important to ask them what you’ll be charged when you’re inquiring.

Payday Loan

You must always investigate alternatives prior to accepting a payday loan. If you can get money somewhere else, you should do it. Yes, most of these options have fees associated with them, but they will be a fraction of the fees associated with a payday loan.

Make sure that you focus on directly applying to the payday loan lenders whenever you apply online. Payday loan brokers may offer many companies to use but they also charge for their service as the middleman.

You should go to a lender with an instant approval option to save time. If an online payday lender does not offer fast approval, move on. There are many others that can give you approval within one day.

If you want a payday loan, be sure everything is in writing prior to signing a contract. There are some scams involved with unscrupulous payday loans that will deduct money from your bank each month under the guise of a subscription.

Only borrow the amount of money you need, even if the payday loan company offers you more. A lender may do this because they could earn more money in fees as a result. Borrow exactly what you need and that’s all you should get.

Don’t lie on your payday loan forms. Perhaps you believe dishonesty will improve your changes of obtaining a loan, but the truth is that cash advance loans are routinely given to those with bad credit or weak job records. At the end of the day, lying on your application is going to hinder your ability to take out loans in the future.

It is important to be aware of all costs associated with payday loans. Such loans tend to charge very high rates of interest. In the event that you do not have the funds to repay on time, the loan will be higher when you do pay it back.

Payday Loan

Always put yourself in time out for ten minutes before signing a payday loan. There are times when you don’t have a choice but a payday loan should not be your first resort in a financial crisis. Before making any decisions involving your finances, ensure that you are no longer experiencing the effects of any emotional shock resulting from the unplanned event.

Don’t apply for a loan with a company you’ve defaulted on a loan with. You might have a need for money, but judging by your history with payday cash advances, you shouldn’t get one.

Before you give a payday loan agency all of your information, you need to make sure that they are reputable. Read consumer reviews and contact the Better Business Bureau to learn about complaints. Review each lenders privacy policy to make sure your information will be protected.

A good way to find a reputable company to get a payday loan from is to check out forums and review sites. You can learn from others about which lenders are best. This way, you can get a good idea of what companies to do business with and which ones to steer clear of.

Now that you know a lot of things about cash advance loans, you will now be able to make good decisions concerning them. If you can make an informed decision about payday loans, you are better off. This guide gave you good tips and it is now time to apply them.

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  4. Payday Loans: Tips To Help You Make The Right Decision
  5. Thinking About Getting A Payday Loan? Read These Tips First


Avoid dangerous or ‘predatory’ loans with these tips

Cash-Advance Loan

A cash advance loan is a small, short-term, high-interest loan that is offered in anticipation of the receipt of a future lump sum of cash or payment. Although a cash advance may be made in anticipation of future legal winnings, pensions, inheritances, insurance awards, alimony or real estate proceeds, the most common cash advance loans are payday loans and tax refund anticipation loans.

Payday loan

A payday loan is a relatively small, high-cost loan, typically due in two weeks and made with a borrower’s post-dated check or access to the borrower’s bank account as collateral.

Payday lending is illegal in several states for a number of reasons:

Payday loans are designed to trap borrowers in debt. Due to the short term, most borrowers cannot afford to repay the loan and pay their other important expenses. If the loan cannot be paid back in full at the end of the term, it has to be renewed, extended, or another loan taken out to cover the first loan. Fees are charged for each transaction. The annual percentage rates on payday loans are extremely high, typically around 400 percent or higher. Lenders ask that borrowers agree to pre-authorized electronic withdrawals from a bank account, then make withdrawals that do not cover the full payment or that cover interest only, while leaving principal untouched. If the lender deposits a repayment check and there are insufficient funds in the borrower’s account, the borrower is hit with even more fees for insufficient funds.

If you are struggling to pay your bills:

Ask your creditors for more time. Find out what they charge for late payments, finance charges or interest rates since it may be lower than what you might end up paying for a payday loan. Work with a community development credit union or a non-profit financial cooperative, which may provide affordable, small-amount loans to eligible members. Ask for a salary advance from your employer, or borrow from Family or friends. Consult social service agencies that may have programs to help with food, housing and home heating costs.

Tax refund anticipation loan

Some tax return preparers offer what they may call “instant,” “express” or “fast money” refunds. These refunds are actually loans borrowed against the amount of your anticipated refund and often include extremely high interest rates and fees. They must be repaid even if you don’t get your refund or it is smaller than anticipated. To avoid the temptation of getting a refund anticipation loan:

File your tax return electronically and have your refund deposited directly into your bank account. This will speed up your refund. Some refunds will be deposited in as few as 10 days. Go to a Volunteer Income Tax Assistance site at your local .Legal Assistance Office. Call the Fort Belvoir Legal Assistance Office at (703) 805-2856 for more information. AARP Tax-Aide helps people of low-to-middle income, with special attention to people who are 60 and older, with taxes and refunds. To locate the nearest AARP Tax-Aide site, call 1-888-227-7669 or visit

Advance fee loan scam

These scams involve a company claiming they can guarantee you a loan if you pay them a processing fee, an application fee or pay for ‘insurance’ on the loan in advance. The company will advertise on the Internet, in the classified section of a newspaper or magazine, or in a locally posted flyer. They will sometimes use a legitimate company’s name or use a variant of a trusted name. They will sometimes ask you to call them at a “900” number, which will result in charges to your phone bill. They will usually ask to be paid via overnight or courier service or by wire, so they can’t be traced. To avoid being taken in by this scam, you should be aware that:

It is against the law for anyone to ask you to pay in advance to get a loan or credit card. A legitimate lender will never guarantee you a loan or a credit card before you apply, especially if you have bad credit, no credit, or a bankruptcy petition on your credit report.

These scams should not be confused with:

pre-qualified offers, which mean you are selected to apply and must go through the normal application process, or pre-approved offers, which require only verbal or written acceptance. Don’t ever give out personal information or agree to a loan over the phone or via the Internet.

Government grant and loan scam

This scam, like the advance fee loan scam, uses the Internet, phone and newspaper to advertise. A company claims that they can guarantee a grant or loan from the government in exchange for a fee. Victims are instructed to send money to pay for ‘insurance’ on the promised grant or loan. They will usually ask that the money be sent via overnight or courier services or by wire, so they don’t leave any trace of their identity or location. They then provide the victim with information that is available in any library or can be ordered directly from the government.

Bounce protection programs

Traditional overdraft protection services allow you to avoid bouncing checks by linking your checking account to your savings account or to a line of credit or credit card that you have with the bank.

With overdraft payment programs, also called “courtesy” overdraft protection or bounce coverage, the bank pays any checks that you write, debit purchases or ATM withdrawals that are for more money than you have in your account. The decision to make this payment is at the sole discretion of the bank. The bank will charge a fee for each transaction and some banks will also charge a daily fee until the account has a positive balance. Some banks will charge loan fees, sometimes twice in a billing period. In order to avoid the imposition of additional charges, the customer must repay the bank the amount that it covered plus any accumulated fees.

High-cost home equity loans

Home equity is the value of your home minus the money you still owe on the home. You can sometimes borrow money from a lender by using the equity in your home as security on a loan. Home equity lending fraud occurs when someone talks a homeowner into taking out a loan they don’t need or that is bigger than they need, or has higher interest rates and higher fees and larger monthly payments than they can afford. If the homeowner falls behind on payments, the lender can take the home.

To avoid Home Equity Lending Fraud:

Don’t give out personal information or agree to a loan over the phone or via the Internet. Don’t let anyone who may be working on your home, like a contractor, steer you to a particular lender. Don’t borrow more than you can afford. Educate yourself. Know what the prevailing interest rates are. Remember that a low monthly payment isn’t always a deal. Look at the TOTAL cost of the loan. Learn the real value of your home by getting an independent appraisal. Don’t trust ads promising “No Credit? No Problem!” If it sounds too good to be true, it probably is. Get your credit report and your credit score. See if you qualify for better rates than are being offered. Never lie about your income, expenses or available cash to get a loan and avoid any broker or lender that encourages you to do so. Avoid early repayment penalties and fees of more than 3 percent of the loan amount (4 percent for FHA or VA loans). Be aware that credit insurance premiums (insurance that a borrower pays a lender) should never be financed into the loan up-front in a lump-sum payment. Don’t ever sign a document that has blank spaces or pages in it that the lender promises to fill out later. Ignore high-pressure sales tactics. Take your time and read everything thoroughly. Be wary of a lender who promises to refinance the loan to a better rate in the future. A predatory lender will let you keep refinancing a bad loan and will charge fees every time. Know that even if you have already signed the agreement, you have three days to cancel it. Take your documents to a housing counselor near you and have them review the documents or refer you to someone who will. To find a counselor near you, visit the Department of Housing & Urban Development online at or call (800) 569-4287.

Auto title loans

These are small, high-interest loans given using a car as collateral. If you default on the loan, you lose your car.


When you rent furniture or appliances you will often end up paying much more than it would have cost you to buy that furniture all at once. If you miss a payment the company may repossess the items and you will forfeit any payments you may have already made.


Loan scam: Probe spreads to Bank of Maharashtra, UCO Bank

NEW DELHI: Widening its probe into what is turning out to be a mega cash-for-loan scam involving public sector banks, the CBI on Thursday registered two more inquiries against Bank of Maharashtra and UCO Bank.

The move came on a day when Prime Minister Narendra Modi referred to the swindle of public money by big borrowers. He said while small borrowers have a good track record in repaying loans, big borrowers are the ones who default. “I know what is happening in that sector,” he said at the launch of the PM’s Jan Dhan Yojana.

CBI is investigating whether Pawan Bansal, who has been arrested for arranging bribes for jailed Syndicate Bank CMD SK Jain, was also in league with Bank of Maharashtra and UCO Bank. The move will reinforce the fear of the finance ministry that the Syndicate Bank scam is part of a larger story of corruption in the state-owned banking sector. While the ministry has been cagey about disclosing details, a review of political appointees on the board of different banks is underway. Appointments which had not come into effect have been put on hold.

Bansal’s laptop, documents recovered from him and his interrogation has led the agency to several instances of irregularities in extending loan and credit facilities by banks. The two preliminary enquiries will look into alleged irregularities in the extension of credit facilities in the borrowers’ accounts, allegedly facilitated by Bansal’s company Altius Finserve.

SK Jain, former chairman and managing director of Syndicate Bank, who is arrested for bribery. (Getty Images file photo)

Sources said no private company or bank officials have been named in the two enquiries and that losses to to Bank of Maharashtra and UCO Bank are yet to be quantified. “We have found some records which seem to be dubious loans or extended credit facilities which went through Bansal. The senior officers of these two banks will be examined soon but those responsible for these loans are yet to be identified,” said an officer.

CBI director Ranjit Sinha told TOI that “more enquiries could be registered in coming days” as the agency teams are analyzing all the documents recovered earlier this month during the raids.

CBI had alleged in its FIR in the Syndicate Bank scandal that “Pawan Bansal, director of Altius Finserve Pvt Ltd, located at Nariman Point Mumbai, has been acting as middleman between senior level functionaries of PSU banks and the private companies through his firm on the pretext of providing financial services like credit solutions, debt capital market investment banking etc”.

Ranjit Sinha, director, CBI. (TOI photo by Sanjeev Rastogi)
Bansal was alleged to be regularly meeting bank officials for pursuing the loan proposals prepared and processed by his firm on behalf of his clients. “Bansal pursues the case of his client by exercising his personal influence over the bank officials and uses corrupt and illegal means to influence them,” CBI had alleged.

CBI sources say they are probing a larger conspiracy in the banking sector where officials of government-run banks are easing loan norms for private persons/companies against rules and regulations.

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