Online payday installment loans are becoming the most common financial resource of people who are in need of urgent cash. These loans are easy to apply and qualify for. The application is done online so you don’t need to leave your home in order to apply. Also, you can apply anytime since the lender is available online 24-7.
However, just like any loan, payday installment loans are risky. They have pitfalls that should be avoided. Accused of being predatory in nature, payday installment loans have inherent risks that consumers need to avoid. Here are some tips on ways to avoid them:
1. Offer Online Applications
The most common complaint in the lending industry, especially about payday installment loans, are the online applications. Although applying online is very convenient for the consumer, scammers have been propagating the internet. The most common risk cited by the government and even the CFA (Consumer Federation of America) is the transmission of personal financial details and other identity information. Consumers are more prone to identity theft and unsecured access of their financial information.
Here are some tips on how these things can be avoided:
· Type in the name of the lender into a search engine and see if many consumer complaints or warnings come up.
· Check if the lender is affiliated with the Online Lenders Alliance or OLA that represents the registered online payday lenders in the country. Members of OLA follow a code of conduct that provides guidelines for responsible lending. All members are strictly obliged to comply and observe these codes of conduct.
· Go through the online lenders website and read all the fine print carefully, assessing the tone and reputation of the lender.
2. Loan Extensions and Rollovers
When a borrower is unable to cope with his payments, most online lenders automatically renew the payday installment loan or offer extensions of the loan. Usually, these repayment options come with additional fees. The borrower is left with the problem of paying off the loan and the associated fees. If he cannot keep up with the payments he may get into an endless cycle of debt.
There are states that regulate loan extensions and rollovers, but some lenders have the ability to remodel the terms. So, as much as possible, avoid late payments and defaults. Extending and rolling over the loan should be avoided.
3. Partial Disclosure of Fees and Terms
Although most states have issued a law against non-disclosure of loan details and the cost of fees, some lenders of payday installment loans still find loopholes in it. Unless the consumer is very cautious when reading the fine print of the loan and inquire about the lender, he may find himself paying than he should.
Payday installment loans are helpful sources of instant cash in times of emergencies. However, they have pitfalls, beware.