Is that pre-approved loan offer legit? | 5 warning signs of a scam

How to determine if a pre-approved loan offer is legit

Dream come true — or mere junk mail nuisance? How to tell if that offer is too good to be true.

If you have a credit history, it’s likely that you’ve received one of them: a large envelope with the name of a respected financial institution or some unknown lender promising a great rate on a loan. When you’re considering a new car or gunning to get that renovation going on your house, it may look like a sign.

But can you trust it? With dozens of lenders sending out these marketing tools, you’ll want to learn how to tell the good from the bad.


Personal loans through Prosper

You could borrow up to $35,000 for a variety of purposes, with rates from 5.99%–35.99%%.

  • Recommended Credit Score: 640 or higher
  • Minimum Loan Amount: $2,000
  • Maximum Loan Amount: $35,000
  • Loan Term: 3 or 5 years
  • Turnaround Time: 1-3 business days
  • Simple online application process
  • No prepayment penalties

    What is a pre-approved loan offer?

    A pre-approved or pre-qualified loan offer is a mailer or Internet opportunity for you to get a loan at a specified rate. These offers often come unsolicited. They can be from a bank you do business with or an institution you’ve never even heard of.

    While you may be tempted to dive right in, take a step back to fully evaluate the offer and who it’s from.

    Keep in mind that pre-approval does not guarantee you a loan. Because it’s based on a soft credit check with only preliminary information, the lender won’t yet have all of the details required to make a final decision.

    Why am I receiving these loan offers?

    Generally, because pre-approved loan offers are based on soft credit pulls, it merely takes having a credit history to start receiving them. Not having credit typically means not being in a position to qualify — or pre-qualify, in this case.

    Certain events might also attract further mailers or offers. For example, if you recently purchased a new car — and like many people had to finance it — it’s very possible you’ll receive multiple loan offers even after you’ve left the dealership.

    Creditors can check with different reporting bureaus to learn whether you match the minimum criteria needed to take out a loan. Because your credit can shift monthly, it’s possible to qualify when the lender conducts the pull but not when they make the offer.

    How to opt out of pre-approved loan offers
    Tired of receiving pre-approved loan offers? Fortunately, there’s a way to opt out for up to for up to five years. Simply visit the FTC-recommended Opt Out Prescreen website or call 1-888-567-8688. To opt out permanently, you can send a written request to the major consumer reporting agencies.

    5 warning signs of a pre-approval scam

    • “100% guarantee” There’s no such thing as guaranteed approval. Too many variables can change between when you actually apply for a loan and when you receive an offer.
    • Upfront fees. If a lender requires you to make payments upfront, it’s a huge red flag. There should never be a case in which you need to give your credit card information to make a payment before you get funded.
    • Urgency. Anytime there’s a rush to get you to apply, take extra time to research it. Scammers will try to push you through the process as quickly as possible so you don’t have time to determine if something is off.
    • Hard-to-find or no contact information. Not listing a physical address could be a sign that something isn’t legit: It’s another point about the provider that you can’t verify.
    • Unsecured website. If the website you’re accessing isn’t secure, be extremely cautions. Some form of encryption is industry standard to keep your information safe.

    Here’s how to avoid a personal loan scam

    What to look for in a legit pre-approval offer

    • Upfront terms. Carefully review the terms and conditions of the offer, which can come with a mile-long list of qualifiers.
    • A name you trust. An offer from a big-name bank or financial institution — especially one you already do business with — is more likely to be legit.
    • BBB rated. Even if you’re unfamiliar with the lender, Better Business Bureau accreditation can be a good indicator of legitimacy.
    • Easy to contact. You should be able to easily find the lender’s phone number, email and website.
    • No promises. There should be no guarantees of approval or rates because the lender can’t determine if your credit will remain the same from when you receive the offer to when you apply.

    Letter in the mail

    Julia received an offer in the mail from a well-known online lender pre-approving her for a personal loan of up to $20,000. It included an offer code and a website link to visit, along with some qualifying terms. Since Julia was looking to add a swimming pool to her backyard, she decided to look into it.

    Instead of applying right away, she called the lender’s customer service line and asked if the offer was legitimate. Once the offer was confirmed, she was able to apply online.

    pre-approved loan mail offer

    Online offer

    Merle found an offer for a pre-approved loan in his email. The loan amount was for up to $10,000, which would cover his garden renovations and then some. He was tempted to apply right away but thought it would be better to wait to give him time for research.

    When Merle went onto the lender’s website, he noticed there was no contact information to be found, save for an out-of-service phone number. Rather than risk it, Merle decided against applying. Instead, he compared other lenders and found a solid rate and term on a legit loan for his needs.

    Phoned in

    When Cassidy received a phone call from a supposed lender offering her a good rate on a loan she was pre-approved for, she was immediately suspicious. The lender claimed that her poor credit history wasn’t a problem, and that they’d just need a one-time fee of $200 to secure the loan.

    Something sounded off, so she took down the name of the provider, the phone number and the name of the agent. All Cassidy could find online were reports of random solicitation calls from that number. Not able to find information about the supposed lender, Cassidy rightfully decided not to apply for the loan.

    Want to apply for a loan online today? Compare legit lenders

    Rates last updated April 21st, 2018

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    Unfortunately, none of the personal loan providers offer loans for that credit score. If you are in urgent need of a small loan, you might want to consider a short term loan.
    Name Product Product Description Min. Credit Score Max. Loan Amount APR
    Even Financial Personal Loans
    Get connected to competitive loan offers instantly from top online consumer lenders.
    4.99%–35.99% (fixed)
    Monevo Personal Loans
    Quickly compare multiple online lenders with competitive rates depending on your credit score.
    3.09%–35.99% (fixed)
    Upgrade Personal Loans*
    Affordable loans with two simple repayment terms and no prepayment penalties.
    5.96%–35.97% (fixed)
    Borrow only what you need for debt consolidation, home improvements and more — with APRs based on overall creditworthiness.
    5.99%–35.99% (fixed)
    LendingClub Personal Loan
    A peer-to-peer lender offering fair rates based on your credit score.
    5.98%–35.89% (fixed)
    CompareFirst Personal Loans
    An easy-to-use loan connection service geared toward introducing first-time borrowers to affordable personal loans.
    2.99%–36% (fixed)
    Best Egg Personal Loans
    A prime lender with multiple repayment methods.
    5.99%–29.99% (fixed)
    FreedomPlus Personal Loans
    Consolidate debt and more with these low-interest loans. Cosigners welcome.
    4.99%–29.99% (fixed)
    Laurel Road Personal Loans
    Get a personal loan with no application or origination fees and a rate discount for autopay.
    5.5%–11.74% (fixed)
    LendingPoint Personal Loans
    Get a personal loan with reasonable rates even if you have a fair credit score in the 600s.
    15.49%–34.99% (fixed)
    NetCredit Personal Loan
    Check eligibility in minutes and get a personalized quote without affecting your credit score.
    34%–155% (fixed)
    OneMain Financial Personal and Auto Loans
    An established online and in-store lender with quick turnaround times. Poor credit is OK.
    typically around 18.49%* (fixed)

    Compare up to 4 providers

    Bottom line

    An offer of low interest and quick funding might sound tempting. Before acting on the loan, look over the information you’ve received completely. Check for any red flags — like guarantees or spotty information — and listen to your gut if it tells you something is off. Even if the offer you receive isn’t legit, there are other legit lenders who offer pre-approval online. Start your comparison by reading the safety reviews of top online lenders that may be able to get you the financing you need.

    Frequently asked questions about pre-approved loans

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    US Personal Loans Offers

    Important Information*
    Even Financial Personal Loans

    Get connected to competitive loan offers instantly from top online consumer lenders.


    Borrow only what you need for debt consolidation, home improvements and more — with APRs based on overall creditworthiness.

    LendingClub Personal Loan

    A peer-to-peer lender offering fair rates based on your credit score.

    SoFi Personal Loan Fixed Rate (with Autopay)

    Borrow up to $100,000 with a competitive APR and no fees.

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