Payday Loans

How To Check The Legitimacy Of Online Payday Advance Loans?

Online payday advance loans are easy to borrow and the best thing about that is that they offer quick approval while the eligibility criteria are also very simple. The only problem with these types of loans is that they are extremely costly. The terms and conditions about these lending programs are often prepared in such a way that borrowers easily get trapped into a nasty never-ending cycle of debts. Even the Federal Trade Commission has warned consumers against such loans. They have gone as far as to say payday lending companies as predatory lenders. Therefore, if you are considering borrowing a cash advance from a payday loan company, legitimacy of the

lender is not the only thing you should look into, but you must also do your calculations thoroughly in advance to make sure whether such loans make financial sense for you or not. However, since these loans are offered online, and in most cases, it is very difficult o locate the physical office of Internet-based pay day lenders, you have to be extra careful.

Payday Loans Are Not Legal In All States

When it comes to checking the legitimacy of online payday advance loans, the first thing that is very important for you to keep in mind is that payday loans or cash advances from check cashing agencies are not legal in every state. Sixteen states, including the District of Columbia, have prohibited check cashing agencies and other sub-prime and payday lenders from offering such loans to the resident consumers of those states. The laws apply to all types of payday loans, including the ones that are offered through Internet or the ones that are offered through local payday loan stores. While it is very easy to take legal actions against local payday loan stores, it is almost impossible to catch Internet-based lenders.

Internet-based lenders that offer online payday advance loans often try to do aggressive marketing about their lending programs and do their best to convince their target customers that the loans they are offering can be obtained by even those people who are residing in a state where payday lending is legal. The reasoning they give behind this is that such state laws apply only to local payday loan stores, and since they are operating their business through Internet and are located in a different state (where payday lending are legal), they are not obliged to abide by the laws of your state. This is just not true. If they are lending money to you, they must abide by the payday loan laws of your state. You must avoid such lenders at all costs.

Check If They Meet Licensing Requirements Properly

If you have doubts about online payday advance loans companies, you must check their licenses first. Ask them to provide you the proof that shows they are licensed lenders and are allowed to lend money to the borrowers of your state. You can also check their records with the state regulatory authority or with the Federal Trade Commission. If you do not find any record about them, it raises suspicion.

Are They Members Of Reputable Business Associations?

Reputable and legitimate payday loan companies do not just fulfill licensing requirements, but they also get membership of reputable business associations, such as the Better Business Bureau. Though such memberships are not legal requirements, they are good signs that indicate that the lender is question is running a legitimate business.

If you are still not confident about the legitimacy of the online payday cash advance loans you are considering borrowing, you are advised to do an online search using a search engine, such as Google. Use “scam”, “consumer complaints” and other such words with the name of the companies you are searching the details for. If you find lots of websites, blogs and forums, where people have complained about those companies, it is wise to avoid them.


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