In these critical times, it is important to know how to avoid becoming a victim of predatory lending scams through researching the background of your payday installment loan lenders. Some online lenders have been in the business of finding a victim to prey on. So before you sign up or close any transaction related to the application of a payday installment loan, it is essential to determine whether your lender is legitimate or not.
Generally, the research process involves contacting industry organizations and licensing boards, as well as checking with consumer reporting agencies in your state. Also, you need to pay close attention to offers that seem too good to be true or may use very persuasive and enticing strategies to get your personal information, such as your checking account or Social Security number.
Here are some practical ways to check if the payday installment loan lender you are dealing with is legitimate:
1. First, contact a recognized national financial association, such as the CFSA or the Consumer Financial Services Association in America, and ask them to verify if the lender in question is legitimate. CFSA is an organization that consists of legitimate payday installment loan lenders in America that follow a strict guideline on the Best Practices for Payday Lending.
2. Visit the payday installment loan lenders website and read all the disclosures about who is the owner of the company, how long they have been in the business and the industry associations that the lender is associated with. You may also research noted associations and inquire about the company’s track record.
3. Do an online search that includes the name of the payday installment loan lender and the word “scam.” This is a helpful strategy to help you determine any existing negative media reports or recent consumer complaints about the lender. A red flag for you is when complaints exceed more than 5 in a year.
4. In line with the number (3) strategy, you can also contact the local branch of Better Business Bureau in your state and check their record. Generally, if the company is a BBB member, they will have a publicly reported history that highlights their length of membership, complaints received, the nature of these complaints and the resolution of the said complaints. This will not only help you to determine if your lender is legitimate, but will also help you foresee problems in the future.
5. If you encountered a payday installment loan lender that puts pressure on you, beware because it could be a warning sign of a scam. A lender, who is making vague offers and not putting terms in writing, suggesting deals that seem too good to be true or evades your questions about the company’s policies and procedures, could be signal he is not legitimate. Also, take note of the following aspects:
· Security encryption seal on the website of an online lender
· Full Disclosure of the terms of agreement
· License from a state governing authority
Overall, avoid lenders who contact you by mail, email or phone, especially if it was not solicited by you. Get the most out of your payday installment loan by doing research to find legitimate lenders.