Advance Fee Loan brokers should not be confused with mortgage brokers, who arrange real estate loans, or money lenders such as banks and credit unions. Loan brokers advertise in newspaper classified ads hoping to attract consumers or business owners with the promise of guaranteed, low interest loans to consolidate debts and clean up credit records.
Advance Fee loan brokers promise to assist their clients to locate and arrange financing. The customer is required to pay an up-front fee before the firm provides any service. The advance fee is generally a fixed dollar amount regardless of the size of the loan and is non-refundable whether the loan is approved or not. BBB files experience shows that few loans are granted by the majority of these companies.
It is important to note that loan brokers cannot guarantee financing. They assist their clients in locating lenders and it is up to the discretion of the lender to approve the loan application.
On September 1st, 1999 the Fair Trade Practices Act came into effect, making it illegal in Alberta for loan brokers to collect a fee prior to the loan being delivered to their customer. If you require a loan, seek credit locally from established financial institutions. If you are refused, make sure that you fully understand the reasons why.
For advice on dealing with a financial crisis, contact Credit Counselling Service of Alberta at 265-2201 in Calgary or (888)-294-0076.
If you paid an Alberta loan broker an advance fee after September 1st, 1999, and would like to report this illegal activity, contact Service Alberta in Calgary at 1-877-427-4088.