Ever been in need of cash to pay the rent but warily avoided going down to the local payday loan outfit? This instinct is justified. Fraud and scams abound in the world of payday loans. However reputable payday loan corporations do exist, and with some work and good research they can be brought to the light of day.
What to Know about State Payday Lending Regulations
In the United States regulations regarding payday or cash advance lending falls to the state legislatures to hammer out. Therefore, when preparing to take out a payday loan, it is important to be familiar with state regulations regarding advance cash lending. Ignorance of state law is just one of the many reasons why people get taken for a ride. Knowing how states regulate payday loans will ensure people know what to look for when they begin their research.
Typically the terms of a payday loan last anywhere from two weeks to a month depending on the state. So take this into account and know when to pay the loan back. While missed payment is not the end of the world, payday loan outfits generally use harsh measures to get their money from delinquent clients, employing collection agencies and the like.
Many states like New Mexico are hopping on the bandwagon and passing legislation that caps the fees these payday lending corporations can charge. Checking for just such a regulation is a good step ensuring the company doesn't try to charge exorbitant rates. There is something else that varies widely from state to state -- finance fees! Some states are lower than others. Arkansas is a mere 17% compared to Colorado's whopping 34%. A good thing to keep in mind when shopping around.
Knowing state lending regulations will help protect against fraud. For a more in-depth state by state run down check out the National Consumer Law Center.
How to Research Reputable Payday Loan Corporations
When it comes to advance cash lending, the best weapon any consumer can have is good research. Thanks to the United States Federal Government and the Truth About Lending Act, payday loan corporations are required to disclose any and all information about their lending practices to their consumers. This is a great safeguard against fraud especially when placed along side the wealth of knowledge that the internet and other sources can provide.
The most important step when choosing to take out a fast cash loan is to do the research beforehand and to use all available resources.
- Choose a variety of payday lending corporations and see what each has to offer.
- Check reviews, draw comparisons between websites, make phone calls, and send email queries to each company.
- Ask for customer referrals, anything to gain a better understanding of each company and how they do business.
- Seek trusted sources. Ask family members who have had experience borrowing from fast cash lending corporations before. Ask them about their company's fees, about its attitude towards them, and about its reliability.
All this can help determine which payday loan company to choose.
Avoiding Fast Cash Fraud
Even the most well researched and prepared customer can get scammed. And the unfortunate truth is many payday loan outfits are just waiting to take advantage. Its important to utilize any cursory knowledge of the industry to avoid fraud, so here are some warning signs.
- First, any payday loan company looking to charge their customers an up front fee before making the loan is pretty suspicious.
- Also, payday loan companies that claim to charge industry-low rates are probably undercutting their competitors for a reason. This is another bad sign.
- Fast cash lending corporations generally service people with poor credit, instead of asking for a credit rating they use proof of employment as an alternative. If a company doesn't do some in-depth questioning about employment history, (i.e. requesting a check stub, a work phone number, or record of previous employment) this probably means trouble. Some companies will even go so far as to advertise first time loans for free to get people hooked. Watch out for this as well.
When borrowing from a payday loan company, trust instincts and the old adage "There's no such thing as a free lunch!" If something seems too good to be true it probably is, and its definitely not worth getting deeper into debt to find out.
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