Online Payday Loan Lender Red Flags
Despite the warnings, you’ve decided you must obtain a payday loan. Now you need to just make sure you don’t get ripped off by the terms, or fall victim to a scam.
You must make every effort to separate the good from the bad by taking the time to research the company you’re considering using for your payday loan. What are some of the red flags to look out for that can at least keep you from falling victim to the most flagrant problems?
Asking for unrelated information
The idea behind a payday loan is that you are employed, you can prove this with a paycheck stub, and you’ll pay back the loan with your next paycheck. So, the lender obviously must request information concerning your employer and verify your salary. An online payday company will be making a direct deposit into your checking account so they will require that checking account number. But beware the lender who asks for information such as your checking account number, your social security number, your drivers license number, and other information, without requesting your employment information. This is a huge red flag of a company out to do your financial harm, perhaps to steal your identity.
Lack of contact information?
Any reputable financial company with online presense will have their street address (not just a P.O. Box) and phone number on their website. While having this information on the site does not necessarily mean the company is legitimate, the lack of such information is a clear sign to not do business with them.
Vague contract details
Of course you know that you need to “read the fine print.” But do you see the fine print? Do you see a contract at all, or do you just see some vague information about how the loan works? If you do not see the full terms of the agreement displayed on the website, ask for a copy of the exact contract you’ll be signing. If there is any hesitation in providing you with such details, run. If you do manage to easily get a hold of the contract, is relatively short and easy to understand, or is it written in such a manner that only unscrupulous lawyers will be able to understand? If you have trouble understanding it, you should not sign it. It’s time to move on to another online payday lender.
Money up front
With a legitimate lender, fees are deducted upon release of the cash advance. If you begin to do business with a payday lender who asks for money upfront, in the form of an application fee or any other monetary request, scratch the lender off your list and move on.
High interest rates and fees
Each payday loan lender may have different rates. For each lender you have narrowed your list to, write down the interest rate and all fees. Assume you will not be able to pay back the loan on time, and calculate which lender has the least damaging cost structure.
Trust your instincts
We can’t define everything you should look out for in choosing a payday lender. As with anything in life, you have to trust your gut instincts. If you at all feel uncomfortable in a lender, you’re getting these feelings for a reason. Trust these feelings. Trust your gut.
Not all payday loan lenders are out to rip you off. Many are reputable. You won’t like the terms of a payday loan, but that’s a function of the type of loan it is, not the lender. If you look out for obvious red flags, take the time to research several lenders, and use common sense, you can come out of this unscathed.