How to Find a Trustworthy Payday Loan Lender

The Importance of Banking on a Trustworthy Payday Lender

To ensure that they will ultimately select a payday lender that is trustworthy and reliable, consumers should shop around and conduct a thorough investigation of the services of which they contemplate engaging.  It is important for prospective borrowers to proceed with circumspection, in light of the fact that the internet is rife with con artists presenting themselves as bona fide purveyors of online payday loans.  The prevalence of scams both online and in the real world is one of the main concerns currently facing the payday loan industry.  The good news is that the U.S. government oversees the average payday loan company and cracks down on fraudulent operators.  Consumers will find useful information at www.usgovinfo.about.com on how to steer clear of disreputable providers.  Additional information can also be obtained through the Federal Deposit Insurance Corporation and the Federal Trade Commission, two governmental agencies that play key roles in addressing issues involving payday loan businesses and their services.

In searching for a trustworthy cash advance company, borrowers should focus on the following factors:

1.      The payday loan lender's website:

First, a website's authenticity can be assessed by determining whether and to what extent it is well-organized, professional, easy to understand, and informative.  A solid indicator of trustworthiness is the presence of a link to the Better Business Bureau or BBB on the payday loan store's webpage.  Secondly, a reputable payday loan lender will assign a company representative to answer customers' questions and/or provide a Frequently Asked Questions (FAQ) page on its website to clarify its policies.  Thirdly, providers of online payday loans should post on their website a detailed privacy and security policy.  Borrowers should only give credence to creditors that display SSL certificates on their application page.  These certify that upon transmission, customers' private personal and financial data are protected by a secure server.  A credible cash advance company will feature on its website a Contact Us page containing a form and an email address.

2.      The application:

A payday loan company should have a well-organized and comprehensive application.  Borrowers should be wary of creditors promising approval of the application if the former answers a few straightforward questions.

3.      Registration with the Better Business Bureau:

A payday loan store that is registered with the BBB can be trusted.

4.      Longevity of the payday loan company in question:

Borrowers should give greater weight to companies that have been in business for a considerable length of time.

5.      Presence of up-front fees:

A red flag should go up whenever a borrower is asked to pay an up-front fee to have his or her payday loan application processed.

6.      Consumer reviews:

Internet reviews as well as personal evaluations from family and friends constitute a reliable credibility check on providers of online payday loans as well as brick and mortar cash advance businesses.

5 Signs of an Illegitimate Payday Loan Company:

The following signs are suggestive of an illegitimate enterprise and should spell danger for consumers:

1.      Up-front payment

A payday loan lender requiring payment of a fee, usually on the pretext that it is a security deposit, an application fee, payment for insurance, or another service fee, should be immediately be deemed a suspect by borrowers.  A legitimate cash advance company will not request such a payment as condition for receipt of credit.  Similarly, borrowers should never have to pay any fee in exchange for a promise to approval of a payday loan.  A legitimate payday loan company will never guarantee loan approval, and it will usually deduct the fees from the sum borrowed.  Furthermore, consumers should regard with suspicion a cash advance company that 1) offers loan approval based on information provided over the phone and waives the credit requirement and 2) informs them that they are eligible for the loan at a competitive rate, irrespective of their credit rating.

 2.      Pressure to wire funds

 A trustworthy payday loan store will never ask consumers to send money orders for the loan or to take any type of immediate action.

 3.      Failure to be forthcoming with information

 Borrowers should beware of companies that express reservations about providing information or are unresponsive to requests for information.

 4.      Phony business name and address

 Consumers are well-advised to verify the company's physical location and phone number by checking with (1) the U.S. Postal Service, (2) directory assistance or the white/yellow pages of the phone book, and 3) the Better Business Bureau.  They should also call the number of the unfamiliar company to ensure that it is the payday loan lender it claims to be.

5.      Excessive data-gathering

Borrowers should avoid businesses requesting more than the basic information needed for loan approval.  A legitimate payday loan company will never request such information as the customer's password, mother's maiden name, or other confidential information not necessary for the collection of the funds.

It is primordial for a payday loan store to implement safety measures for the protection of consumer information.  These prevent the misuse, alteration, and/or loss of the data that is in the cash advance company's possession.  Since the internet poses additional risks to informational privacy and security, a reputable payday loan lender will usually take the following steps to ensure the confidentiality of clients' data:

1.  Utilize a server encryption that is the industry standard, such as Secure Socket Layer (SSL) technology on all confidential data transfer and

2.  Protect accounts against unauthorized access by employing high-level security practices and technology.

Posted by Yara Zakharia, Contributing Editor, on September 12, 2007 at 12:00 AM