How to stay safe when taking a payday loan
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Payday loans are a quick and easy source of funds for a majority of people. They are an alternative source of funds for individuals who may not access bank loans due to having low incomes or a poor credit rating. The ‘Payday lending in America’ study by the Pew Charitable Trust revealed that 69% of the interviewees took the payday loans so as to cater for the ordinary expenses. Prior to this, the assumption was that payday loans are used to cater for emergencies.
Although the payday loans are good, the flip side to this situation is that there are individuals who are making bad use of the information shared. This may lead to identity theft. Also, a borrower needs to ensure that they do not get caught up in vicious, cycle of being in debt. So, if you are planning to get a payday loan, and want to have security over your finances as well as your identity and other aspects, here are some measures that you may take:
Approach licensed and registered payday lender
Transacting with payday lenders who are licensed will give you some assurance that they are operating within your law, that you will both have rights and duties and should anything happen against the contract, each party will be liable.
Do research on the lender
You need to know what you are getting yourself into and thus extensive research should be done. Know the lender, their historical record and if they have committed any violations. Such information is available in the Better Business Bureau (BBB). You are also able to see the number of customer complaints that they have received and how well they handled them.
Go through the loaner’s terms extensively
Most tricksters would like to take advantage of individuals who are not aware of the details. They would then pounce at an unsuspecting borrower, getting them off guard. Be familiar with the terms of the contract before signing it and be aware of the legal fee charged per $100 borrowed in the state that you are in.
Do not send any payment before being awarded the loan
As you are the borrower, you should not be expected to send any money before being awarded the loan. This should not be the case in any normal business scenario. Should you find that you are being asked for money beforehand, do further research as this is probably a scam. Trustworthy payday loan providers would collect all payments owed to them on the borrower’s payday.
Have direct contact with the company
So as to ensure a smooth transaction, open communication is required. A legitimate payday loan provider is one who will be easy to approach through a direct phone number. Better yet, they will have a representative who you may meet face to face.
Should you come across one who does not have a physical address, a functional website and the only way of contacting them is through the mail, be aware that this is most probably a scam. With the reality that some payday lenders in existence are scams, ensure that your need for cash does not expose you to risks. Carry out due diligence at all times and do not blindly sign any contract, as some may look too good to be true.