With the rise of payday loans and a huge increase in the number of people taking them out, how can you be sure that your payday loan provider is legal? It’s worth checking that you’re taking out a loan through a reputable company – if you want your money to come from a safe place and you want your data to be secure, then there a few things you can check before taking out a loan from a payday loan provider.
What Is a Payday Loan?
A payday loan is a short term loan offered by many lenders. They are normally based online, and a quick search for a payday lender brings back thousands of results. Many people use them to pay emergency bills, meet minimum credit card repayments or pay for urgent medical or dental care.
Are they Safe?
If you take out a loan from a reputable, legal company, then they’re perfectly safe. However there are thousands of companies out there who aren’t to be trusted – we’ll tell you how to spot these and learn how to avoid them!
How to Spot a Legal Lender
A recent EU study showed that 4 out of 5 payday loan companies were operating illegally. Many companies did not provide contact details so that consumers could get in touch with them, many didn’t specify any representative APRs and many didn’t have licenses, and had no way for consumers to check their history or credentials.
So What Should You Look For?
Contact details from any payday lender are hugely important. If there’s a problem with the money you’re borrowing or you have any questions about the whole process, you want to be able to get in touch with the company that you’re dealing with. This is one of the reasons why having contact details available for people to see is an absolute must. Having a representative APR listed on the website is a sure sign that they’re a good company to deal with – if there’s no representative APR listed on the website then it’s a very good indication that you shouldn’t trust that company. Loan agreements and general rules for lending are also a legal requirement on any reputable loan company website. If you can’t find these documents on a website of a company that you’re debating taking a loan out from, then you shouldn’t take a loan out from that company!
What are the Risks?
If you use an illegal money lending service, you’re setting yourself up for a whole host of problems. All these online money lending services require your passport details, and if you’re sending your passport details you want to make sure that the company you send them to aren’t going to use them for any kind of fraud – having your passport details cloned or used by anybody else can have severe consequences for you. It’s also worth remembering that if you use an illegal firm, you’ve got no guarantee that they’re going to play by the rules – it’s possible that they will try to charge you more than you were expecting, send you threatening letters or harass you which again is not something that would be good for your life. There have been so many reports of illegal money lenders using very illegal methods to threaten and harass people that it’s not worth the risk to you to use a company who you can’t trust.
So if you’re looking for a payday loan lender, make sure you use a trusted, reputable, legal company – often their interest works out much more cheaply than a bank’s, as long as you’re using somebody you trust!