A payday loan company makes short-term loans. In return, the customer agrees to repay, plus loan fees, upon receiving his next paycheck. Due to the nature of the business, payday loans are controversial. Plus, unscrupulous individuals are lurking for easy prey. If you are not careful, choosing the wrong company can turn an already stressful situation into a nightmare. Therefore, it is important to know if a company is reputable before applying for a loan. Follow a few pointers and you will find a legitimate payday loan company.
Find a legitimate payday loan company checking with the Better Business Bureau. Find out whether any complaints were filed against the company you are considering. Additionally, you can do a search on the Internet to assess a payday company. All you need to do is enter the company's name followed by the word “scam” or “fraud.”
Look for a note stating the lender's fees and interest rates. If you are applying online, the note should appear on the website. If you apply at a payday loan center, the note should be located in a high-traffic area.
Make sure the contract is written in clear and understandable English. State law requires that it contain the following information: loan amount, interest rate, loan fee and any other applicable fees. Additionally, the due date should appear, as well as your options, in case you are unable to repay the loan in full on the due date. The contract's structure is an important factor to consider to know if a company is legitimate or not.
Tips & Warnings
- A payday loan is a short-term financial solution. If you decide that you need to request a payday loan, make sure the funds are available on the due date so you do not incur additional charges.
- Beware, not paying the loan in full on the due date could result in high renewal fees. If not careful, you could become awash in debt.
- Photo Credit Creatas/Creatas/Getty Images
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