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Payday loans have become a financial cushion for many people since it’s easy to qualify for. When there are financial emergencies, and they need immediate cash, they run to payday loan lenders. Unfortunately, some payday lenders take advantage of the financial situation of consumers by using deceptive marketing strategies and less than desirable loan terms and interests.
It’s good to know that legislation protects consumers from unfair and deceptive debt collection practices of some payday lending operations. But one can never be too sure given the large number of payday lenders out there. Thus, every consumer needs to be more cautious when choosing a credible loan lender.
If you’re considering getting a payday loan, read on, and learn how you can better choose a reputable payday loan lender.
Check Legal Compliance
The first thing you should check on a payday loan lender is whether different regulations cover them. It is essential to ensure that they are licensed to operate. There’s legislation that requires payday loan lenders to secure a license before they can operate on their business.
You have to ask for their license number before you make a deal with any of them. This way, you’d be able to protect yourself from fraud since the license proves that the state regulators have approved their business practices. Note that there are states where payday loans are not allowed, so it would be best to check your state’s regulation regarding this type of loan.
Look For A Clear Customer Service Charter
A genuine payday loan lender provides clear information on their services and commitment towards the customers. You can see many lenders with a vague commitment to maintaining their customer service standards. But a lender with a good customer service charter gives you specific details of what you can expect from them, aside from the advantage of being quick and easy.
Moreover, it provides information that may help you decide how much to borrow and whether or not a payday loan is appropriate for you. It also presents details about how and where you should file a complaint if you are mistreated during a loan agreement.
Note that a customer service charter is a written policy that discusses your lender’s commitment to you. Thus, it can serve as your protection for any abusive and deceptive practices. But it wouldn’t also hurt to go over the reviews of their previous customers to see if the lender exactly delivered their established expectations.
Examine Advertising Practices
Easy borrowing terms and no credit checks are a great deal for payday loans. However, many lenders use it only for promotion and may charge you with hidden fees later on. It is important not to get carried away easily with their advertisements. Examine first whether what they are advertising is indeed reliable.
Remember that reputable lenders will employ sound advertising practices. They are transparent in disclosing how their loan works and how much it costs. If the lender does not clearly state their interest rates and terms, there might be hidden agendas in their advertisements.
Beware of Multiple Loans
Depending on the state where you live, you usually have limitations with the amount of money you can borrow with payday loans. However, some payday lenders would try to convince you to go over the limit by extending you multiple smaller payday loans. You should be careful if the lender suggests to you to take this option.
By offering you multiple loans that stay under the limit, they can charge you fees that are not under the law. Such a scheme can put you into more financial troubles later on. No matter how urgent your financial need is, a credible lender would not put their customers in situations that would make it hard for them to make payments in the end.
Review Terms and Conditions
Even if the lender is licensed and has positive reviews from other customers, you should not be complacent in making any deal with them. It’s important to note that a reputable lender must provide you a clear written statement that specifies the loan amount, repayment date, and annual percentage rate.
Any lender who is reluctant to give such information may not be reliable. That’s why you must review all the lender’s terms and conditions before signing up for anything. In doing so, you’d be able to spot what is missing in the agreement, which can be a red flag.
Compare The Market
Before deciding on a payday lender, it would be best to compare the market in terms of what they can offer and their credentials and connections. It might be easier to avoid the risk of unregulated payday lending if you go for companies associated with a bigger organization. Checking how long the payday lender has been in the business is also essential.
Takeaway
Having financial emergencies can be overwhelming, which can cause anyone to make rush decisions in their finances. Although payday loans are designed to be quick and easy, not all payday lenders who offer them are reliable. Therefore, it is always vital to take your time before you commit to any of them.
