How to Navigate Payday Loans Without Getting Scammed
In today’s fast-paced world, financial situations can change quickly. Many turn to payday loans, a flexible solution providing a lifeline when you need cash—but it’s essential to be wary, as many each year fall foul of payday loan scams.
This guide will explain payday loans, tips to avoid becoming a victim, and the best place to access quick cash safely.
What is a Payday Loan?
Payday loans are unsecured, short-term loans intended to be paid back on your next payday. Borrowing amounts range depending on the lender, with a typical upper limit of $500. One significant advantage is accessibility, with successful applicants getting paid within hours and days rather than weeks and months.
To ensure a borrower can repay the money, a lender will conduct some basic checks, which can include credit score, income, employment history and repayment capacity.
Check out our payday loans page to learn more about how they work.
Recognizing Common Payday Loan Scams
Scams are sadly common in the financial world, with payday loans no exception. Last year, the average victim of payday loan fraud lost $1000, so it’s vital to remain vigilant to the different tactics employed by criminals and unscrupulous lenders. We’ve listed our top nine points to watch out for to keep you safe.
1. Advance Fee: Any lender who asks you to pay an upfront fee must be discarded instantly. The arrangement should be that you receive money from the provider, not the other way around, and any attempts to relieve you of your hard-earned cash are a big red flag.
2. Ghost Debt Collectors: Have you ever taken a payday loan? If so, you might be contacted by fraudulent debt collectors trying to exploit this to make a quick buck. Check that the debt collectors are affiliated with the lender if you’re unsure, and if they are, ask for a breakdown of what you owe and why.
3. Hidden Fees: Some less reputable lenders may hide fees in the fine print of their loan agreements. Always read the documentation thoroughly, and if something isn’t clear, don’t hesitate to ask for clarification. Even industry-standard fees like interest rates and late charges should be checked, and if they seem too high, it might be best to avoid them altogether.
4. Guaranteed Approval: Guaranteed approval is a bad sign for any type of loan. Any provider worth their salt will conduct at least rudimentary checks on a prospective borrower to ensure they can repay the loan. Without these checks, the lender is likely not to be trusted.
5. Too Good To Be True: Lenders who promise 0% interest loans or other seemingly impossible deals must be handled cautiously. Here’s a good rule of thumb: If it seems too good to be true, it probably is.
6. Licensing: Licensed payday loan providers are registered with their state. If a lender doesn’t appear to have the appropriate license or it is unavailable on its website, you should ask why.
7. Secure Websites: Before applying for a payday loan, check that the website is secure. Online security should alert you to any dangers, but if you don’t have any, seeing https:// at the start of the URL, indicates no prying eyes are watching.
8. Online Reviews: Online reviews provide insight into a lender’s reputation, but take them with a pinch of salt. For example, perfect or near-perfect scores can be achieved through fake ratings—so for an accurate picture, look at multiple reviews from different sources and observe consistent themes.
9. Pushy Sales: Once you’ve made your enquiry, you may be contacted by a salesperson. There is nothing wrong with this, but if you find yourself being coerced into making a decision, your answer should always be no.
Different Types of Payday Loans
Far from being a one-size-fits-all, payday loans come in many shapes and sizes. Some of the most common types include:
Instant Payday Loans: Also known as fast cash loans, these are processed and approved quickly, sometimes in less than an hour—helpful if you’re in a tight spot.
Bad Credit Payday Loans: While having bad credit can hinder your borrowing prospects, it’s not the end of the world. Many lenders offer loans for those with bad credit to cover unexpected expenses.
No Credit Check Payday Loans: As discussed earlier, no reputable provider will forgo checks entirely. However, some payday loans do not involve credit checks as part of the application process, with lenders taking a more surface-level examination of your finances.
Slick Cash Loan: Your Trusted Payday Loan Provider
Slick Cash Loan is a platform that connects borrowers to a network of trusted and licensed lenders offering transparent pricing and a range of loan types to meet your needs. We’ve helped thousands of customers navigate choppy financial waters with our services—so, whatever your situation, we’re happy to see how we can help.
References:
https://www.bbb.org/all/scamstudies/payday_loan_scams_study/payday_loan_scams_full_study