A large percentage of Americans have taken out a payday loan at least once in their lives. A payday loan is a loan that is granted for a short period at a relatively high-interest rate and with high fees. These loans are usually taken out for unexpected situations when people don’t have enough money for everyday expenses. For example, when there are several days or weeks left until it is time to get paid and the family urgently needs money for food, utilities, car repairs, medical care, and so on.
Before deciding to take out such a loan, it is advisable to weigh the pros and cons carefully and see if there are other better options for obtaining the desired amount. After all, a payday loan as any other loan creates financial obligations. If you decide to take out a loan you should know how to choose a lender who is trustworthy and responsible. The fact is that there are quite a lot of fraudsters in this business, but learning to distinguish them from reliable lenders is quite simple.
In this article, we have collected the main tips on how to choose the right payday loan lender.
How to Choose a Payday Loan Lender? The Best Tips
Check lender compliance with legal regulations
First, check whether the payday loan lender is covered by various regulations. You should make sure that it has a license for this type of activity, as required by the legislation.
Before you make a deal with any lender, you should find out their license number, confirming that the state has approved their activities.
It is also worth bearing in mind that some states do not allow payday loans at all, so you should first check how this type of lending is regulated in the state in which you live.
Learn the rules of customer service
A lender must provide details about its services and commitments to customers. Many lenders vaguely provide this information, which should be alarming. A responsible lender with a customer service charter will give as complete and specific information as possible about what you can expect from it, not just the benefits of quick and easy service.
Keep in mind that a customer service charter is a written policy that outlines the lender’s commitment to borrowers, and this data can serve as evidence of protection against any fraud.
Carefully check out customer reviews
You should also read the reviews of previous borrowers about the lender you are thinking of making a deal with to make sure that the lender is being accurate in its responsibilities.
Investigate the lender’s advertising policy
Simple loan terms and no credit checks are a good deal for getting a payday loan. But lenders often use them only for marketing purposes, and in reality, they charge clients hidden fees. So don’t believe too much in their generous promises – make sure the lender is telling the truth first.
Reliable lenders never hide how their loan works and how much it costs. So if interest rates and terms are unclear, you should suspect that the lender has a hidden agenda.
Explore the terms and conditions
Even if the lender is licensed and has good customer reviews, you should request a clear written statement from the lender before you make a deal with it and sign a contract. It should include information such as the loan amount, repayment period, and annual interest rate.
Any lender who is unwilling to give this information can be considered unreliable. If the terms and conditions are missing something, that could be a red flag.
Compare the offers on the market
Before you make a deal with the chosen lender, compare the options presented on the market by their credentials and working conditions. This will help reduce the risk of unregulated payday loan lending. It is also worth clarifying how long the lender has been working in this market.
We hope that the information in our article will help you avoid the financial troubles associated with payday loans. However, don’t forget that it’s best not to deal with this type of loan at all. Before taking a payday loan, think through all your other options and consider the pros and cons.