23 February 2014
Loan Sharks Online
Payday loans - like any loan - are a financial product extending monies to clients with the expectation that it will be paid back in full. When handled responsibly, a payday loan is a legitimate means for customers to obtain cash loans, and in many cases - in less than 24 hours. As a customer though, and especially one who uses or is thinking about using online payday loans, it's important to be scrupulous, and aware of loan sharks online.
The Federal Trade Commission recommends that current and potential payday loan (also known as cash advance loan) customers be aware of the following warning signs:
- Fees that are not disclosed clearly or prominently. Scam lenders may say you've been approved for a loan, then call or email demanding a fee before you can get the money. Any up-front fee that the lender wants to collect before granting the loan is a cue to walk away, especially if you're told it's for "insurance," "processing," or just "paperwork."
- Legitimate lenders often charge application, appraisal, or credit report fees. The differences? They disclose their fees clearly and prominently; they take their fees from the amount you borrow; and the fees usually are paid to the lender or broker after the loan is approved.
- A loan that is offered by phone. It is illegal for companies doing business in the U.S. by phone to promise you a loan and ask you to pay for it before they deliver.
- A lender who uses a copy-cat or wanna-be name. Crooks give their companies names that sound like well-known or respected organizations and create websites that look slick. Some scam artists have pretended to be the Better Business Bureau or another reputable organization, and some even produce forged paperwork or pay people to pretend to be references. Always get a company's phone number from the phone book or directory assistance, and call to check they are who they say they are. Get a physical address, too: a company that advertises a PO Box as its address is one to check out with the appropriate authorities.
- A lender who is not registered in your state. Lenders and loan brokers are required to register in the states where they do business. To check registration, call your state Attorney General's office or your state's Department of Banking or Financial Regulation. Checking registration does not guarantee that you will be happy with a lender, but it helps weed out the crooks.
- A lender who asks you to wire money or pay an individual. Don't make a payment for a loan or credit card directly to an individual; legitimate lenders don't ask anyone to do that. In addition, don't use a wire transfer service or send money orders for a loan. You have little recourse if there's a problem with a wire transaction, and legitimate lenders don't pressure their customers to wire funds.
Don't get caught up in a bad short term loan by getting involved with loan sharks online. Rather go to a trusted like CashAdvanceReviews.com where you can see user generated ratings of the top rated cash advance online lenders.