Your bank account is close to zero and your next pay date is not for a few more days. You need to fill up the truck with gas, buy some groceries, pay the water bill, and who knows what else. We have all been there. You think it’s too embarrassing to borrow money from a friend or a family member so the first thing that you think of is a pay-day loan. You wonder if there are any online options so you hop on to a search engine to find out.
One Stop Shop
One of the first sites you find promises to show you the best online lenders on one convenient site. All you have to do is fill out a small form providing some basic information, your name, home address, phone number, and e-mail. Next, you’re presented with a list of “great” online lenders in your state who will help you out. You select one of them and again are asked to fill out a form. But this time they ask for more. To make sure you are “approved,” you need to share your social security number, maybe a few personal references, and your checking account information. No problem, right?
Wrong. Chances are the website is nothing more than a front to get your personal information. They claim they need your social security number to run a credit check, but it’s doubtful they will actually do that. They say they need your checking account information so they can deposit the funds into your account, but they probably will not do that either. What they will likely do is charge your checking account $99.49.
While getting your money back might be a difficult task, by coming together you can help put a stop to these scams. Because the pay-day loan provider had you provide your checking account information instead of a credit card, initiating a charge back is not an option. Your bank also will likely not lend a hand because you voluntarily provided the pay-day loaner with the details of your checking account. The only recourse for this type of scam is to try to contact the pay-day lender who took the money and to request a refund. However, this will be very difficult to do. What you can do is post your experience on Scambook.com. Sharing your post will ensure that other people are informed and prevented from being scammed like this in the future. And with less victims, you can help put an end to these scammers.
How can you tell if this lender is legit or not?
1. If the loan provider says that credit scores don’t matter, be careful. Credit scores are one of the biggest ways reputable financial institutions make decisions on who to loan money to. By working with a lender who ignores credit scores you are running a couple of risks. First, it might be scam and there might not be any loan. Second, you might be signing up for a loan with an exorbitant interest rate.
2. Make sure the lender is actually registered to do business in your state by checking your state’s attorney general’s website. Pay-day lending is a highly regulated industry, if they aren’t registered then it is likely a scam.
3. Finally, there are certain rules lenders must follow. They must show you how much the loan will cost you, the annual percentage rate, and it must be presented all in one place before you sign and accept the terms of the loan. If an online lender is missing any one of those requirements then watch out.
Lend Me an Ear
So what should you do if you need cash now? While the terms are usually not very good, pay-day loan providers do offer a service that some people need. Be sure to check to make sure the lender isn’t a scammer by visiting Scambook.com to see if anyone else has posted about this specific lender.
The Federal Trade Commission has a great article discussing the dangers of online pay-day loans. They also have useful advice for finding low-cost help for credit problems. If you anticipate that you will be unable to make a payment on an existing loan, you should contact the lender as soon as possible. Your creditors might be able to change the terms of the loan or let you defer a payment.
Of course, it is also a good idea to set a budget and try to stick with it, to plan for the future and to save for emergencies. But if you are in a bind, at least research the lender first at Scambook.com to make sure you’re not getting the short end of the deal.