If you are in a bind and need quick cash you can consider a payday loan. But before you sign on the dotted line, you need to know more about payday loans. In the past, there have been payday loan scams in which lenders have taken advantage of people. Here are some signs of loan scams and how to avoid them:
1. Pressure to act immediately
When you’re in a financial bind, the first loan offered to you can be tempting. However, this is rarely a good idea, especially regarding payday loans. Payday lenders can sometimes be notoriously expensive, with high-interest rates and fees that can quickly trap you in the debt cycle.
Before you take out a payday loan, it’s important to understand the risks and how to avoid the scams that some lenders use. If you can’t find reputable online payday loan lenders, check out Pronto PaydaysA loan matching service that connects you with licensed and reputable lenders.
2. Cancellation of debt
Some lenders will offer loan cancellation to entice you. They agree to cancel all or part of your loan if you make regular payments over a period of time, but this is usually a trap. The lender will likely raise the interest rate on your loan, making it more difficult to repay.
They can add hidden fees and charges, making it more difficult to repay the loan. It’s best to avoid lenders who offer debt cancellation and instead focus on finding a lender who will work with you to develop a realistic repayment plan.
3. Request for a deposit in advance
When looking for a payday loan, it’s important to be aware of the scams some lenders may try. A common scam is to request a deposit before lending you money. This is usually done under the guise of “verifying” your account or some other similar reason.
Don’t fall for it! If a lender asks you to put up a deposit before they lend you money, walk away. It is almost certainly a scam. There are plenty of legitimate lenders that do not require a deposit. So if you are looking for a payday loan, find one of these lenders.
4. A payday lender asks you to provide an insurance
We have also witnessed situations where some lenders ask you to pay an insurance fee to get approved for the loan. Borrowers should be careful with this, as it is one of the most common scams in the payday loan industry.
The insurance fee is usually a small percentage of the loan amount and is supposed to protect the lender if you default on the loan. However, these fees are just another way for the lender to make money from you.
If a payday lender asks you to pay an insurance fee, do your research to make sure it’s a legitimate fee and not another way the lender is scamming you.
5. Sending email from Gmail or Yahoo
In most cases, companies sending their emails from a free Gmail or Yahoo are probably scammers because serious companies will always invest in professional email.
If you receive an email from a company offering a payday loan and the email is from a Gmail or Yahoo account, it’s likely a scam. This company will use it often Free email account to avoid detection and make it difficult for people to identify them.
Therefore, if you are considering taking out a payday loan, only deal with companies that use professional email accounts. You can usually find this information on the company’s website.
If you have any doubts you can contact the company directly to ask about their email address. A legitimate company should be happy to provide you with this information.
6. They ask for your bank login information
Payday lenders may ask for your bank login information to steal your money. They may say they need it to verify your identity or process your loan. Do not give them this information.
A legitimate lender will never ask for your bank login information; If a lender asks for this information, it’s a huge red flag that you’re dealing with a scammer.
If you’ve already given your bank login information to a payday lender, change your password immediately and contact your bank to let them know what happened.
Yes, online payday loan scams still exist, but the signs and tips above will help you avoid them. Payday lenders are required by law to disclose the terms of their loans, so be sure to read all the fine print. If something doesn’t feel right, walk away.