Which of the following is a red flag indicating a Home Improvement Loan Scam?

A contractor requiring upfront payment without a detailed contract is a significant red flag indicating a potential home improvement loan scam. This scenario suggests a lack of professionalism and accountability since reputable contractors will typically provide a comprehensive contract outlining the scope of work, payment schedules, and terms before starting any job.

When a contractor asks for an upfront payment but does not offer a clear and signed contract, it increases the risk of fraud since consumers may end up paying without any guarantee that the work will be done or even started. This practice can leave homeowners vulnerable, as they might be unable to recover their funds if the contractor does not fulfill their obligations.

In contrast, requesting payment after the job is done typically indicates a more trustworthy transaction. Providing a list of references also suggests the contractor has confidence in their past work and client satisfaction. Furthermore, guaranteeing specific results without a timeline might sound concerning, but it can sometimes stem from a contractor's confidence in their work, rather than being a definitive indicator of a scam. Therefore, upfront payment without a detailed agreement is a key warning sign that should raise concern.