Payday Loans

Beware Of Internet Based Loan Sharks – Three Reasons Why Online Payday Loan Credit Can Be Very Risky

Payday loan credit is no doubt an expensive option to borrow money, but it can especially be much more hazardous if you are borrowing from an Internet payday lending company. Besides the basic risks of very short repayment period, automatic renewal of loans, and unusually very high fees, online lending involves several other risks as well. Online short-term cash advances are often much more expensive than the loans offered from storefronts. Besides that, there may also be certain privacy and security risks involved with the process. Though it is very easy to sign contracts electronically, as you just have to fill out a simple online form and click an OK button, yet this simple process may turn out to be a very expensive affair when you later find out that it has pushed you into a severe debt trap, getting out of which seems impossible. Following are the three major risk factors associated with online payday lending programs.

It Is Very Difficult To Track Down Lenders

Lenders that offer online programs through websites can be very hard to locate, as they provide very little information about them. They may even be located offshore. Although even these virtual lenders are subject to the laws and regulations of the state where you obtain the loan, the regulating authorities often fail to enforce the laws practically against them. It is comparatively much easier to catch those lending companies that offer these types of loan programs from storefront offices.

Borrowers End Up Getting Trapped In Serious Debt Problems

Online payday loan credit programs often involve automatic renewal terms, as per which certain amount of finance charges is withdrawn electronically from the borrower’s bank account every month without charging the principal amount and the loans get automatically renewed for an extra month. Borrowers who are unable to make the full repayment often do nothing against this practice and thus en up getting trapped into a very serious debt problem within just a couple of months, as the outstanding dues keep on growing bigger and bigger with every passing month because of the unreasonably huge fees associated with the same. But, you may be shocked to know that even those borrowers who are capable and willing to repay the loan in full often have to take extra steps in order to get their loan accounts closed. The process of closing these online loan accounts can be very complex one, as the borrowers have to contact the lenders and notify them that they want to make the payment in full and that the loan accounts must be closed after that. Unless such notifications are sent, the company continues to make electronic debit for certain finance charges every month.

Your Privacy And Security Can Be At Risk

When you fill out an application form from a website in order to sign up for an online payday loan credit program, you have to provide some personal identification details to the lender, such as your bank account information, routing number, and Social Security Number. You are sending these crucial pieces of information to unknown lenders that are hard to locate, which means you are actually putting your security and privacy at great risk. The process can be more dangerous if you are supplying all these details over unsecured web links. It is very important for you to keep in mind that clicking on a simple OK button may bind you to an expensive loan contract, where you permit the lenders to access your bank account electronically, not only to deposit the loan amount but also to withdraw the payments along with certain fees. Since unknown lenders that are hard to locate become authorized to access your bank account and that they also have your key financial details, there is always a high risk of fraud and identity theft.

If you have become a victim of an online credit scam or if you happen to find out a website that seems to be engaged in unscrupulous activities, you can file complaint against the lender with the Federal Trade Commission, your state Attorney General, and your state regulator.

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Posted in Payday Loans, Risk Factors | 2 Comments »

2 Responses to “Beware Of Internet Based Loan Sharks – Three Reasons Why Online Payday Loan Credit Can Be Very Risky”

  1. Maybell Woody says:

    Thank you for your insightful comments. I hope to visit your website soon.

  2. Joseph says:

    Good points. Today we can not imagine our life without internet. We can do every thing online but there are a lot of problems associated with it. It is very difficult to stop cyber crime. If you are going to take a pay day loan and that too from internet pay day lending company, you have to be very careful. It is easy to catch the companies which have store front offices in case of any illegal activity but the same will be very difficult in the case of online companies. Such companies do not provide their exact location; therefore you can not take any legal action against them. The company will follow the rules of their own state, they do the renewal of loan automatically and the borrower finds him helpless. Any individual applying for an online loan has to provide his / her personal information to the creditors and if the company is involved in some illegal activities, they can misuse the data. So it is good to enquire everything about the creditors and then press the OK button because by using the button, you are going to authorize the unknown creditors to access all your personal information.

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