Online Payday Loan Safeguards for Consumers

The landscape of the online payday loan world is becoming increasingly more difficult to navigate. When one searches the term "payday loan" or "cash advance loan" millions of results are returned, often leaves the person looking for a short-term payday loan confused and uncertain of the best option that is available for them. What unassuming consumers don't realize is that the vast majority of these websites are nothing more than gimmick pages that pretend to offer loans, but in actuality do not. Often these sites will sell the consumer's information to another lender. Sometimes the consumer is lucky and their information is sold to a reputable, locally licensed loan provider. Other times consumers are taken advantage of by lenders based outside their own country, operating without a consumer loan license that is fundamental in protecting the rights of the borrower. What should borrowers looking for cash advance loans look for in a lender that will protect their rights and offer them a short-term loan at a great rate?

1) The website should provide consumers with an address where it is located. By listing an address consumers have a means where they can contact the lender regarding questions, send mail correspondences, and know whether they are locally licensed. Consumers should be leery of lenders who only provide an email address where comments can be made. Often these lenders ignore incoming emails from consumers looking to learn more about their loan, the due date, and other critically important data. Reputable online lenders will have a toll-free telephone number, show a mailing address, offer a "live chat" feature and provide a means to communicate via email.

2) The lender should show on its website the licenses of the states where it is licensed. Borrowers who deal with lenders without licenses in the states where the loan is offered are guaranteed one thing: trouble. If a borrower lives in Montana and the lender is located and only licensed to offer loans in Wisconsin, the Montana borrower is not protected in any way. The lender does not have to provide the safeguards that the Montana legislature has enacted into law. This can lead borrowers to confusion and in the end be quite costly. Look for lenders who not only claim, but show their short-term lending license on their website. Often these licenses will be called by different names: deferred deposit loan registration, payday loan license, or deferred presentment licenses. Regardless of the name look for the license. This is your safeguard and assurance that the lender you are dealing with will protect your interest.

3) The lender should not advertise higher loan amounts than what is legally available in your local area: How often have borrowers been duped by the promise of "Loans up to $1,500!" only to find out that the amount they are offered is much less. This disappointing reality is the fault of the advertiser, not the lender. Often online cash advance advertisers will use promises such as a high loan amount or "money in an hour" to get borrowers to use their services. The reality is that most states don't allow consumer to borrow more than $500 to $800 dollars (some states do allow more). Also the majority of lenders are unable to deliver funds in less than one business day. If an advertiser is promising whatever the borrower wants, the borrower should expect to be disappointed. Reputable lenders will not lend more than the borrower's state allows and more than the borrower can repay.

4) Look for lenders who are members of CFSA (Community Financial Services Association). With the myriad of choices available, lenders should look for the CFSA seal on the lender's website. The blue oval seal ensures borrowers that they are dealing with a lender that goes above and beyond the required safeguards required by law. Lenders voluntarily pledge to allow a once a year extended payment plan for borrower who need a little extra help, lenders promise to be truthful in their advertising, and remind customers to use payday advances responsibly and to clearly display the fees associated with the loan.

By following these safeguards, consumers looking for payday loans can better determine whether they are dealing with an advertiser posing as a lender who promises to deliver unbelievable loans or an honest and reputable lender who is focused on meeting the borrower's realistic needs while providing excellent safeguards.

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