Posted on: 31 March 2016
Payday loans are a helpful way to get money quickly when an emergency arises. They allow you to borrow money the same day and pay it back out of your following paycheck. Unfortunately, there are fake payday loan companies who prey on people while they're in need. If you're looking for a reputable source to get a payday loan online, here are some tips for ensuring the company is legitimate.
Look For a Physical Address
Don't assume that the cash advance company only does business online so they don't need a physical address. Reputable companies will have a physical business address on the website, including the building number, street, and the city and state.
Don't Do Third-Party Lending
Some online payday loan companies do third-party lending. This means that you fill out an application through the company and they match you with a broker that will give you a loan. The problem with third-party lending is that you don't deal with the lender. The company is basically setting up your loan for a fee. They will take their cut and then pay the lender. With third-party lending, you'll be paying a much higher interest rate to pay the loan back. It's best to find a company that does direct lending, so you are borrowing from them and only paying them back.
Don't Use Unsolicited Offers
After applying for a payday loan online, it's common to suddenly begin getting e-mails telling you that you're pre-approved for payday loans through companies that you never heard of. This is because they are many different phishing sites that disguise themselves as payday loan sites and they sell your information to different scam companies. Don't give into the e-mails that are promising you thousands of dollars within 24 hours. Some of these companies will give you money, but then continue to automatically withdraw money well after your loan is supposed to be paid back.
Make Sure the Company is CFSA Approved
The CFSA is the Community Financial Services Association. The association was created to regulate the payday loan industry and ensure that payday loan companies are following community standards. If the company is a member of the CFSA, they will have a seal on their website to show this. You can go to the CFSA website to read more about them and what they do to ensure cash advance companies follow only the best business practices.
Check the Interest Rate
Before you sign off on your payday loan, make sure you pay attention to the interest rate. Too many people look at how much they're borrowing and how much they need to pay back the following paycheck without looking at the percentages. Your paperwork will show what interest rate you are paying on the loan. The average payday loan will take 36% of the person's next paycheck to pay back, making it impossible to get through the next payday without taking out another payday loan to cover the loss. These high interest rates are causing people to get into a vicious payday loan cycle that they can't pull out of. Make sure your interest rate is within the legal limits. Some states have a cap on interest rates. Colorado has a legal limit of 129%, which is the lowest in the country. Maine's legal limit is 217%, but other states such as Idaho have rates over 500%. Online lenders have to give you an interest rate within the legal limits of the state that you live in.
Payday loans are a great way to get money when something comes up and you have no one else you can ask. However, when looking for payday loans online, you need to be extra careful because the internet is full of predators. Follow these tips to make sure you get a fair loan through a legitimate company. For more information about the process, contact a company like EZ Money.Share