8 Loan Fee Scams To Avoid & What Fees Are Legit
8 Loan Fee Scams To Avoid
Start with the truth. Not all advance fees are scams. In private credit, upfront fees are common because real deals take work before money moves. Underwriting, modeling, legal drafting, collateral checks, site inspections, KYC, bank charges, and insurer reviews cost time and cash. A real engagement puts these costs on a clear scope with invoices, deliverables, and controls. Scams ask for money with no contract, no paper trail, and no path to closing.
- Legit advance fees fund defined work: underwriting, third parties, and filings
- Legit fees sit on a signed mandate or term sheet with a scope and caps
- Funds move to an attorney trust or regulated escrow, not a random wallet
- You get receipts, named providers, and dates for each workstream
What real upfront fees pay for
Eight loan fee scams to avoid
1) Fake “due diligence” fee with no scope
They ask for a diligence fee before they show a mandate or term sheet. No list of work, no vendors, no timeline.
How to verify: Demand a written scope, vendor names, invoices, and a start date. No paper, no payment.
2) Escrow that is not escrow
They say funds are “in escrow” but give a personal account, a money service, or crypto wallet.
How to verify: Use a licensed attorney trust or regulated escrow. Confirm the account holder, license, and engagement letter.
3) SBLC or “BG lease” fee stories
Promoters sell “leased SBLCs” and ask for a swift fee or a small retainer to unlock millions. The paper is fake or unusable.
How to verify: Only work with real banks under ISP98 or URDG758. No MT messages or charges before KYC and a bank term sheet.
4) Insurance premium to “unlock” a loan
They ask for an upfront premium to a mystery insurer. No policy, no schedule, no broker of record.
How to verify: Get the draft policy, insurer name, broker authorization, and a binding timeline. Pay the insurer or broker, not a random intermediary.
5) Application fee mills
Small “application” or “packaging” fees collected in volume with no real underwriting. You get a decline and a shrug.
How to verify: Ask who the credit authority is, what the tests are, and when a decision memo is produced. No authority, no fee.
6) Upfront “commitment fee” with no term sheet
They want a commitment fee before you see amount, price, tenor, covenants, security, or conditions precedent.
How to verify: Pay commitment fees only after a signed term sheet that names the funding entity and conditions.
7) Proof of funds or bank rating letters for sale
They sell POF, BCL, or “bank comfort” letters to make your file look strong. Real lenders ignore these purchased letters.
How to verify: A real bank issues comfort only inside its own credit process. Do not pay third parties for status letters.
8) Pay for SWIFT tests before KYC
They request fees for MT799 or “pre-advice” traffic before any bank has run KYC or approved limits.
How to verify: Banks do not send authenticated messages until parties are onboarded and a facility exists. Decline and walk.
Legit advance fee vs scam at a glance
Five minute screen
Checklist before you send a cent
- Signed mandate or term sheet that names the funding entity and the fee caps
- Escrow or attorney trust details on letterhead with license or bar number
- Invoices from legal, inspection, and collateral control providers
- Timeline for drafts, inspections, and decision committee dates
- Refund wording for unused third party funds if the deal stops for reasons outside your control
- Two references from funded clients in the last twelve months
Need a clean mandate with real deliverables
We scope the work, name the vendors, and show the path to funding before any large payment. If you want a real process, open the data room and get a term sheet.
Request a Term SheetFinancely is an advisory and placement firm. We are not a bank. All engagements require KYC and AML checks. Outcomes depend on lender or insurer approval. Instruments follow UCP600, URC522, ISP98, or URDG758 when applicable.
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