Contributing editor: Mevish Jaffer
The rumors are out there and a good portion of it is true. Phony payday loan companies continue to throw online scams out at innocent consumers. The good news though, is that the word is out on the streets now so consumers are becoming more and more cautious of their online surroundings. The bad news is for the legitimate payday lenders who are now fighting to regain the trust of online consumers. Unfortunately the trend seems to point at the fact that as online companies become increasingly sophisticated, so do the crooks. These wrongful geniuses find method after method to steal the money right out of your hands.
For many consumers, a payday loan or cash advance is the fastest way to attain funds in times of financial difficulty. They are also increasingly gaining in popularity as the qualification process proves to be quick and convenient. Payday loans are typically taken out on a short-term basis for a time frame of about 1-2 weeks and are repaid on the borrower’s next pay day. However, defaulting on repayment often results in rolling over the loan amount by paying penalty fees to the borrower’s lender. On the other hand, having to pay these additional fees can be entirely avoided by the borrower by simply repaying their loan in a timely manner.
Online Loan Companies: Payday Lenders or Scam Artists?
Most of the time, borrowers turn towards a payday loan in order to take care of unexpected bills that come up such as medical emergencies, car repairs or perhaps as a means of financial support in between paychecks. When searching for a payday loan company or lender, most consumers will utilize the Internet because it produces quick results in the comfort of their own home. However what most borrowers might not necessarily be aware of is that while the Internet is the most cost-effective way to find a payday lender, it also might not be the most secure if they are not careful.
Unfortunately, many consumers fall prey to payday loan scams on the Internet as scammers tend to use a borrower’s financial stress to their advantage. Often, borrowers find themselves so financially frustrated that they are apt to sign a payday loan agreement without carefully reading the document in its entirety. For this particular reason, it’s very important for consumers to compare payday loan rates from several different online lenders so they don’t fall victim to payday loan fraud.
Avoid Payday Loan Scams
The following points illustrate a typical online payday loan scam that borrowers need to keep an eye out for:
- Lenders that offer payday loans at extremely low rates (if it’s too good to be true, it usually is!).
- The loan lender’s Web site contains no contact information, such as an address or phone number.
- The lender asks the borrower to send in more than just the basic information generally required for payday loans.
What ends up happening in most payday loan scam cases is that the lender does not send the borrower any money, claiming that he/she did not get approved for the loan. In reality, these so called payday loan lenders, really scammers are after the borrower’s personal information, including social security number, credit card number etc. More often than not, their main objective is to engage in fraudulent activities through what is commonly known as identity theft.
The fact that cash advance scammers do exist should in no way negate consumers from turning to the Internet as a source for finding a good deal on their loan because not all online lenders lead double lives as scammers. Borrowers just need to be extra careful and compare rates from several different lenders in order to get a fair idea of the going rates as they truly apply. It’s also a good idea to read the payday loan agreement and fine print more than just once and not skim over it in a hurried fashion. Borrowers also need to be mindful of the repayment plan attached to their payday loan. As long as everything is read over carefully and all terms and conditions are understood and mutually agreed upon, a borrowers’ payday loan experience should be a positive one.
