Need easy access to money ASAP? If you find yourself running out of cash, then you be might be considering taking a payday loan.
These days, taking out a payday loan is nothing but a click away. However, as easy as that may sound, the risks of running into scams and illegitimate lenders are incredibly high. In this guide, we’ll show you how to properly check if a lender is legitimate, ensuring you won’t fall into the hands of online scammers.
What To Look For In A Legit Payday Loan
Before we discuss the things that you need to watch out for to avoid scams, let’s take a look at the things that a legitimate payday loan does have.
- Proper License and Accreditations. Direct payday lenders are required by state laws to get a license. This ensures that their business complies with all of the legalities and rules that are imposed by the state. You should also check if the lender has the Better Business Bureau accreditation. The BBB has helped people identify trustworthy business all over the country for more than a century.
- Clear Fees and Charges. One way to tell if an online lender is legitimate is if they are honest about the fees that you will pay during the loan term. Make sure that the loan contract clearly states all applicable charges.
- Contact Details. Check if the lender has a complete set of contact information, including a physical address. Communication is essential in any business transaction and making sure you are talking to a real person, especially one who is unafraid to speak to you lengthily about your loan, should ease your mind.
How To Recognize Scams
Now that you know how to check if an online lender is legitimate let’s discuss the red flags you need to watch out for to identify a fraudulent loan offer.
- You are asked to send money upfront via money card or wire transfer. The rule of thumb is, you should not have to give money to get it. Legitimate lenders will process your loan accordingly before asking you for any fees and charges, which they usually require during repayments.
- They are claiming that you will have “Guaranteed Approval.” Be wary of people claiming that you have been pre-approved for a loan, especially if you did not initiate the contact. Legitimate lenders will always check and process your loan to make sure that you are not a liability before they approve it.
- You are immediately asked to give sensitive personal information. Giving out personal information such as your Social Security Number or any private financial details is not something you should quickly do. If they ask you for any of this information before doing a proper credit check, then they are probably scammers. Make sure that the company has legitimate contact and business information before volunteering your details.
- They are unprofessional. One easy way to spot scammers is if they give unprofessional sales and services. Although bankers or lenders don’t have the reputation of being warm and hospitable, they do appear business-like and professional. Notice the way they talk, their knowledge about loans and beware if they have a very aggressive approach that pressures you into their service.
- They don’t provide you with any written confirmation. Do not sign any agreement until they provide you with written confirmation of your debt. An email sent to you does not count, especially if you did not initiate the correspondence.
Finally, Do Your Research And Trust Your Instincts
When it comes to any financial transaction you do online, you should always take the time to do your research before going through with it. Dealing with third-party business and establishing trust is challenging on its own, but doing it online is even more nerve-wracking.
By following this guide, you will save yourself from a lot of trouble. If a transaction feels wrong to you, or if it feels too good to be true, then it probably is. Trust your instincts and remain vigilant and diligent.