Are you strapped for cash? Do you almost feel ready to take out a payday loan online? If so, don’t worry.
You’re not alone. Lots of people have been and are in your same situation. But you want to be confident in your decision before you move ahead.
Even when you’re short on money, you should only settle for legit payday loans. The last thing you want is to get caught up in a scam! Here’s five things to consider when looking for a reputable lender.
1. State Laws
Did you know that payday loans aren’t legal in some states? For example, Georgia prohibits payday loans entirely.
Other states have strict and specific laws regarding interest rates and installment plans. For example, Arkansas requires that payday loans have an interest rate cap of 17%. This is all to protect people like you.
Too often, illegitimate payday loan lenders take advantage of unknowing consumers. Because people were and sometimes are so desperate for cash in the moment, lenders could charge outrageous interest rates that would trap the person in debt forever.
These state laws strives to avoid that lifetime debt. Because of these laws, a legit payday loan lender has to follow strict regulations set by the state government.
If the lender you’re looking into doesn’t abide by the laws or has their own rules, they’re probably not legit! If they’re operating outside of your state’s regulated limits, they’re doing it illegally. Steer clear of illegal activity, it’ll only bring you grief!
2. BBB Accreditation
Great news: payday loan lenders can be accredited by the Better Business Bureau! If the lender you’re working with has BBB approval, you should breathe a huge sigh of relief.
The BBB is a non-profit organization founded way back in 1912. Their purpose is to check out businesses and determine if they’re legit or not. If a business is accredited by the BBB, that means it’s trustworthy and legitimate.
Fortunately for you, if your lender is approved by the Better Business Bureau, then they’ve done all the investigative work for you. You don’t need to worry about whether they’re a solid, legal business.
When you’re looking into short-term lenders, check their BBB accreditation. If they have it, PHEW! You’ll have peace of mind. If they don’t, ask yourself why.
Don’t hesitate to ask them why! The answers you unearth will greatly help you determine if they’re a legit lender.
3. Money Down
Some home loans, construction loans, student loans, federal loans, and personal loans require a certain amount of money up front. For example, FHA (Federal Housing Administration) loans for home buyers require at least 3.5% down.
Conventional loans (also for home or property buyers) can require anywhere from 5% to 20% down. Construction loans for houses or businesses require hefty down payments, at least 20% down and sometimes even more.
SBA (Small Business Administration) loans for new or expanding businesses ask for 10-20% down. Were you aware that payday loans are not that way?
Instant approval payday loans legally don’t require money down. Your money “down” is part of your origination fees, which are rolled into your loan amount.
That means your payday loan lender should not require you to pay them before you can borrow money! If they do, that’s a major red flag!
A sure sign of an illegitimate lender is if they require money upfront. Do not hesitate to walk away from a lender if this is one of their policies!
4. Straightforward Fees
Have you ever dealt with a company, person, or institution that had all sorts of hidden fees? Is there anything more maddening than secret charges, incorrect rates, or under-the-table fees?
With a legit bad credit loan, there should be no hidden fees or charges. Everything should be laid out for you clearly, before you borrow.
What are the fees during your loan term? How long is your loan term? What is the ending amount owed? What is the interest during the loan term, does it change?
Be sure that you completely understand your origination fees, installment fees, interest rate, and every other detail of your loan before you sign anything! If a lender has extra fees or hidden charges, they might not be legit.
Legal fees and charges include state-regulated caps on interest rates. A legit lender of legit payday loans can’t set interest rates higher than your state allows. That information should also be clear and straightforward.
5. Money Use
When you take out certain other loans (other than payday loans), sometimes there are stipulations as to how you can use the money. For example, a second mortgage on your house can’t be spent on a vacation for your family.
But this rule doesn’t legally exist for payday loans. There should be no rules, restrictions, or requirements about what, where, when, or how you use the loan money.
If a lender tries to tell you how you can or can’t spend your loan, they might not be legit! Of course, your use of the loan must be legal, but that’s the only existing stipulation.
Be sure to keep an eye out for spending stipulations, that’s a sure sign of a sketchy lender. If that situation arises, don’t hesitate to ask questions and dig deeper to get straight answers.
For more information on other loans like mortgages, check out this article. There’s plenty of resources out there to learn all you need to know.
Get Legit Payday Loans
Are you tired of being so stressed about your money situation? Is the lightness of your wallet terrifying you because you have upcoming expenses or back debt?
You do have options! Payday loans no credit check exist for people in your situation. Unfortunately, payday loan scams and illegitimate lenders also exist.
You must be aware of what shady, possibly illegal lenders look like in order to recognize legit payday loans. With all the information you just learned, you can be well informed!
Read our other articles about finances and loans. Check out this one all about payday loans to learn the details you should definitely know.