As a former banker and employee of several loan companies, I am very familiar with the lending practice of lenders sending valid checks in the mail offering “quick cash” to people who qualify. Once the consumer cashes the check, a valid loan is made and all the terms outlined on the letter or check that was sent by mail apply. This loan is an unsecured loan because no collateral was taken to secure loan.
Assuming the consumer begins to make payments to the lender after cashing the check, the lender may contact them to thank them for their business and offer them more money. The catch is that at this time, the consumer must come into the office to sign a promissory note and the lender may require collateral at this time by asking someone to list household goods that they own. The loan now becomes a secured loan.
If you are in need of quick cash, before you cash that check you received in the mail, please consider the following:
- If you are in need of cash, usually a loan by check in the mail does not give you the best loan terms (i.e., payments, interest rate, etc.) so you might want to shop around with several lenders before cashing the check you received in the mail.
- READ THE FINEPRINT. As we all know, if it seems too good to be true it is probably too good to be true! Before obtaining any loan, whether by check or person, always make sure you know and understand:
- The interest rate
- The repayment amount and how often (i.e., weekly, bi-weekly, monthly, etc.)
- Whether the lender is taking any collateral (i.e., what would be at risk if you cannot repay this loan)
- Be wary of “thank you for your business” calls from lenders offering you more money. Ask yourself, whether you really need the additional funds before accepting any new money and whether they would be requiring you to offer collateral when you get the new funds.
- If you are asked to give collateral for a loan, do not let the lending representative put words in your mouth when they ask you to value your properay. You know how much your property is worth, NOT the lending representative. NOTE: I have had several clients who have advised me that a lending representative told them what value to put down on their paperwork because it would help them “get the loan” because the collateral would show that it is worth more. You have to sign the document stating that what you listed is true and correct NOT the lending representative.
Mary Pool is a shareholder of the Bond & Botes Law Offices in Montgomery and Opelika, Alabama. She holds a Bachelor of Science from Auburn University at Montgomery, and a Juris Doctorate from Faulkner University’s Jones School of Law. She has represented thousands of clients over her more than 11 years working in the bankruptcy field. Read her full bio here.