Here’s How You Can Avoid the Scams of Payday Lenders
You may consider a payday loan if you’re in a bind and need cash fast. But before you sign on the dotted line, you should know more about payday loans. In the past, there have been payday loan scams in which lenders have taken advantage of people. Here are some signs of loan scams and how to avoid them:
1. Pressure to Act Immediately
When you’re in a financial bind, taking the first loan you’re offered can be tempting. However, this is rarely a good idea, especially regarding payday loans. Payday loan lenders can sometimes be notoriously expensive, with high-interest rates and fees that can quickly trap you in a cycle of debt.
Before you take out a payday loan, it’s important to understand the risks and how to avoid the scams that some lenders use. If you can’t find reputable online payday loan lenders, check out Pronto Paydays, a loan matching service that connects you with licensed and reputable lenders.
2. Debt Cancellation
Some lenders will offer debt cancellation to lure you in. This is when they agree to cancel all or part of your debt if you make regular payments for a certain period of time, but this is usually a trap. The lender will likely increase the interest rate on your loan, making it even more difficult to pay off.
They may also add hidden fees and charges, making the debt even more difficult to repay. It’s best to avoid lenders who offer debt cancellation and instead focus on finding a lender who will work with you to create a realistic repayment plan.
3. Request for a Deposit Beforehand
When looking for a payday loan, it’s important to be aware of the scams that some lenders may try to pull. One common scam is requesting a deposit before they lend you money. This is usually done under the guise of “verifying” your account or some other similar reason.
Don’t fall for it! If a lender asks you to deposit before they lend you money, walk away. It’s almost certainly a scam. There are plenty of legitimate lenders out there who don’t require a deposit. So if you’re looking for a payday loan, find one of these lenders.
4. A Payday Lender Asking You to Pay an Insurance
We’ve also witnessed scenarios where some lenders request you to pay an insurance fee to be approved for the loan. Borrowers should be careful with this, as this is one of the most common scams in the payday lending industry.
The insurance fee is typically a small percentage of the loan amount and is supposed to protect the lender in case you default on the loan. However, this fee is just another way for the lender to make money off of you.
If a payday lender asks you to pay an insurance fee, do your research to ensure that this is a legitimate fee and not just another way for the lender to scam you.
5. Sending Emails From Gmail or Yahoo
In most cases, companies sending their emails from a free Gmail or Yahoo are most likely scammers because serious companies will always invest in professional emails.
If you receive an email from a company offering a payday loan, and the email is from a Gmail or Yahoo account, it is likely a scam. These companies will often use free email accounts to avoid detection and make it harder for people to trace them.
Therefore, if you consider taking out a payday loan, only deal with companies that use professional email accounts. You can usually find this information on the company’s website.
You can contact the company directly to ask about their email address if you have any doubts. A legitimate company should be happy to provide this information to you.
6. They Ask for Your Bank Login Info
Payday lenders may ask for your bank login information to steal your money. They may say they need it to verify your identity or to process your loan. Do not give them this information.
A legitimate lender will never ask for your bank login info; if a lender asks for this information, it is a huge red flag that you are dealing with a scammer.
If you have already given your bank login info to a payday lender, change your password immediately and contact your bank to let them know what happened.
Yes, online payday loan scams still exist, but the above signs and tips should help you avoid them. Payday lenders are required by law to disclose the terms and conditions of their loans, so be sure to read all the fine print. If something doesn’t seem right, walk away.