Are all payday loans scams?It is definitely not the case that all direct payday loans lenders are in fact scams, there are a number of reputable lenders out there who will be willing to extend credit to those who are in a financial emergency. But it is important to remember that not all lenders are entirely fair, and may have extremely high rates of interest. This is where it can lead to issues, as if people take out a payday loan without checking the terms and conditions of their contract, and they have ended up deciding to go with a less than reputable lender they could end up facing charges that they were not anticipating when they took out the payday loan, meaning they could end up trapped in a cycle of debt that they can’t get out of as a result of very costly repayments. Whilst this is not necessarily a scam in itself, it is less than trustworthy way of acting as a lender to customers. We will now take a look at actual payday scams that exist.
Upfront feesOne of the most popular payday loan scams that exist is a company that is supposed to be a legitimate lender claiming that they will be able to guarantee you a loan provided that you pay an upfront fee first. They may ask you to send this money through a way that may make it potentially difficult to trace or get back once it has been sent across. Examples include:
- Money order
- Gift cards
- A wire transfer
Fake online formsThere is another way that you may end up involved in a payday scam and this involves the proliferation of fake online forms. This is where a supposed lender has set up a website and requires you to fill out an online form giving important details (i.e. your bank details) and then once you have input this information on the form and send it off, you never hear from the operator again and receive the cash that you have requested. Instead, you may end up enrolled in a particular type of membership program that ends up taking money out of your account using the information you provided on the scam payday loan site. In order to not end becoming prey to this kind of scam, take your time to carefully look at the site in question and make sure that it is reputable. To make sure that your financial information is safe, you should look at loan websites that have an SSL certificate. These help to secure a website through encryption, which means that your personal information is then protected.
Payday loan collectionA popular payday loan scam involves someone pretending to be a debt collector in order to take your money, They may end up threatening you with legal action or potentially arresting you in order to make you feel scared and more likely to give the cash. They may have ended up receiving your personal details through no fault of your own such as through a third party, for example. A way to protect yourself includes not giving out personal information of any kind over unsolicited calls, and you should also not send out money to someone who is apparently supposed to be a lender.
Ways to protect yourself from payday loan scams
- Check out reviews online for the payday loan companies that you are considering getting a loan with. It should ring alarm bells if you are seeing a lot of negative information online about a lender, or alternatively if there is no information whatsoever about them available
- Be cautious when it comes to phone calls: if a supposed lender calls you offering a payday loan, it is probably the case it is a scam
- Compare different loan providers: there are so many payday loan lenders on the market, which can make the task of choosing the right one hard and even overwhelming. As a result, make things easier (and also make it less likely that you will fall prey to a scam) by checking out lenders through one of the main comparison websites. This means that you can gauge the legitimacy of the websites in question, as well as check out which have the best rates and are the most suitable for you.