There are thousands of payday loan stores across the US, with hundreds more on line, and they all have one thing in common – they want to lend you money.
Many of them have something else in common: they don’t want you to think too much about borrowing from them. They proclaim how “fast” their loans are, because they want to get you on the hook before you know what you are agreeing to.
While reputable lenders have nothing to hide, the shady lenders have a few things they DON’T want you to know.
#1. All Payday Loans are NOT the Same
One payday lender is as good as the next, right? WRONG! Very, very wrong.
There can be massive differences in interest rates or borrowing fees from one payday lender to the next. There can be additional service charges tacked on to what you borrow. Some lenders are not even lenders, they are simply loan brokers that sell your information to the highest bidder.
So whatever you do, don’t make the mistake as think all payday loan companies are interchangeable.
#2. You Need to Sign a Contract
Fast fast FAST! Get your cash in minutes!
The thing is, some companies want to rush you through the process so quickly they don’t follow the rules. And if you get swept up in their aggressive practices, you may be doing yourself a disservice.
If you are taking out a loan, you need to sign a contract. This contract will lay out the terms and conditions of the loan. This may be an electronic contract that you sign with an e-signature, it does not have to be a paper and ink contract. But you need to sign a contract all the same. By not having all the terms and conditions in writing, you do not know what you are truly signing up for.
#3. Payday Loans May be Illegal in Your State
There are 32 states where payday lending is fine and dandy, but in the other 18 states (plus Washington DC) it’s another story entirely. Some of these states allow some forms of payday lending, with restrictions, and in others it is outright illegal.
In these states, it is NOT legal for an online lender to do business with you, regardless of which state (or country) that business is based. So before you just into a contract with a lender, make sure your local laws allow it.
#4. Payday Loans are Not Regulated
How do you know the lender you are dealing with on the up and up? A flashy website and some well-written customer testimonials are not an indicator of a respectable loan company. And although the government is currently working on overarching rules for the payday industry, as of now no one is really monitoring many online lenders.
A good indicator of reliability is longevity. How long has the lender been in business? If a company has been making loans for ten years, that’s a good sign to the stability of the lender. However, if they just put up a website last month, you may want to keep looking.
#5. Your Sensitive Information Might Be Getting Sold
Lenders are not banks. They are not held to the same standards, if any standards at all, so do not think that your financial data is being kept confidentially. From a reputable lender, you will be asked if its okay to share your information with other lenders to find you the best loan. But many lenders just re-distribute the information you give them. This can include your social security number and banking information.