Is a loan offer that only requires a small processing fee before the funds are released real?
No. Advance fee loan fraud is one of the most common financial scams — any loan that requires upfront fees before funds are released is fraudulent.
Last reviewed: 1 June 2026
Explanation
Advance fee loan scams target people who are financially vulnerable or have poor credit. The fraudster offers a loan at surprisingly good terms — no credit check, low interest, large amounts — but explains that a small fee must be paid first to release the funds, cover insurance, or satisfy a regulatory requirement. After the first fee is paid, new fees are invented, and eventually the scammer disappears. No genuine regulated lender requires upfront payment before disbursing a loan. Arrangement fees for legitimate loans are always deducted from loan proceeds or added to repayments — they are never collected in cash or by transfer before you receive any money. If you are asked to pay anything upfront to access a loan, stop immediately.
Common red flags
- Any payment required before receiving loan funds
- No credit check mentioned alongside large loan amounts
- Lender cannot be found on a financial regulator's authorised firms register
- Loan offer arrived unsolicited by text, email, or social media
- Additional new fees invented after the first one is paid
What to do now
- Never pay any fee before receiving loan funds
- Check the lender on your financial regulator's register
- Seek credit through your bank or a regulated credit union
- Report the fraudulent offer to your financial regulator
Frequently asked questions
What about credit brokers who charge a fee to find me a loan?
Some regulated credit brokers do charge a fee, but they must be authorised, must disclose the fee in advance, and must refund it if they cannot find a suitable loan. Never pay a broker fee to an unregistered party.