loanbits

Internet Payday Loans or Cash Advances

It’s clear that Internet loans are more convenient than storefront loans. You don’t need to drive to a storefront lender or wait in line.  Simply log onto your computer and find a loan site.  Piece of cake.  But be careful! Convenience can come with a high price.  This article helps you balance the convenience with the potential high price.

With a storefront lender, at least you know who you are dealing with.  You can verify the State licensing of storefront lenders by simply looking at the State license that is typically posted in a prominent location in every legitimate payday loan store.  You can get a sense of how good a storefront lender is by checking out the quality of the store.  Is it clean?  Are the employees helpful and knowledgeable?  If you walked into a storefront lender that was set up in a tent or other temporary structure and the employees didn’t know what they were doing, you would walk out.

With Internet lenders, it is difficult to make these decisions.  How do you know which lenders are legitimate and which lenders are basically set up in a tent and who could pack up and leave you hanging with no customer service and no recourse if you have a problem?  Read this article to find out how.

Storefront payday lenders usually require the borrower to submit a photo ID, cancelled check and a copy of a payroll check to process a payday loan.  They also require that you personally sign a loan agreement.  All of these items are easy to provide (and easy for the lender to obtain) when you walk into a “brick and mortar” loan store.  How do Internet lenders process applications?  For example, how does an Internet lender verify your identity and payroll information?  How do you sign a loan agreement?  Advances in technology have made it possible for Internet lenders to verify your identity, confirm your payroll information, and sign a loan agreement.  All in a matter of seconds.

Payday lenders may seek information beyond that which is typically required to make a credit decision.  Beware of the lender that asks for an ATM PIN (personal identification number), license plate number, social security number, mother’s maiden name, height, weight or eye color.  Personal information of this type is not required, should not be given out and consumers should be concerned this information may be used for fraudulent purposes.  Some payday lenders declare all their loans are made by FDIC insured institutions but fail to disclose the name of the institution.  Also, keep in mind, many of these so called lenders are operating out of a foreign country.

Loan applications may be completed online or by phone.  One lender has a phone number that equates to the words HAPPY ME.  When you complete an online application, if one of the payday websites is a fly-by-night operation, you have no way of knowing just how secure the Internet line is.  No one needs identity theft on top of a lack of funds.

Payday loan sites often have a large network of lenders.  One of the sites states their lenders do not extend loans to residents of New York, Massachusetts, Georgia or Kansas.  These states either sued or are in the process of suing to stop illegal payday lending.  The Georgia Legislation Act protects consumers against abusive lending practices.  This same site requires a proven source of income, email address, listed home phone, checking or savings account and a borrower must be at least 18 years of age.  Internet lenders require the consumer to have a paycheck Direct Deposit to qualify, and to assure the funds will be in the checking account when it comes time to repay the loan.  If you can meet all those requirements lenders customarily promote “Three Easy Steps!”

1. Complete and submit an online application or apply by phone, if offered.
2. Receive the funds in your account – usually by the next business day.
3. Repay your loan

A typical site discloses an annual percentage rate for a $100 payday loan with a $25 fee as 652%. Contracts from Internet payday lenders include a range of one-sided terms such as mandatory arbitration clauses, agreements that the borrower will not participate in class action lawsuits, agreements not to file bankruptcy for the life of the loan and the borrower will not close their checking/savings account until the loan and fees are paid in full.  Sites that have a network of lenders or brokers may also ask the borrower to release the actual site from liability resulting from misconduct. 

Finally, a borrower can be threatened with prosecution for bounced checks even though the lender knew at the time he wrote the check he had insufficient funds in his account.  That was the reason for the loan.  It is always the borrower’s responsibility to read the terms and conditions.  Better yet, print them out in the event you have a problem with the loan and the website is shut down with no forwarding address.