Everyone can earn a little extra cash to get by until the payday. Payday loans, also known as cash advances are attractive, but consumers must proceed with caution. According to The Better Business Bureau (BBB), short-term high-rate loans can come at a very high price.
Payday loans can be a quick way to earn cash, especially for people who maybe have that lower credit score, unable to get that quick cash in a simple loan from a financial institution. It’s something that might sound interesting to some of those folks but the challenge comes in when they don’t pay off that loan in fifteen to thirty days as per the terms of the agreement.
BBB is a great resource for the state and federal Congress to give the experience when they are developing the bills over where consumers are getting ripped off or where there is some confusion. Thus, consumers get extra protection to be sure that they are dealing with financial entities that are licensed. There are also some disclosures that are required in terms of fees as well as the interest rates when consumers go and get a payday loan.
There are some extra protections that consumers really need to understand, especially those folks that English is their second language. That can be a challenge because a payday loan can seem like a really good deal but they don’t necessarily understand what happens if they don’t pay off the loan in that specific time frame. Usually, it results in thousands and thousands of complaints BBB gets nationwide, because of such confusions. For example, $15 might not seem like a lot but maybe a couple of hundred dollars to borrow until the next paycheck that is not paid off in time could result in up to three – four hundred percent interest somebody will have to pay back. So paying off the loan can take several months and by the time this money is paid off it can be thousands of dollars.
Protection tips when getting a payday loan
1. Be sure you select the right service provider carefully by checking it out with BBB.
2. Double check the service provider for licensing and registration.
3. Make sure you don’t pay any upfront fees; they should be deducted from your paycheck when you get that payday loan.
4. Go to lender’s physical location and talk to them face to face.
5. Be wary as lenders might ask for a wire transfer. Every time you get a wire transfer, there is a very little protection as opposed to using some kind of credit card or a checking account. Wire transfers are very difficult to track and actually lot of the payments are made from outside of the USA. It makes them basically impossible to track because you will have to get federal authorities involved in order to track such wire transfers.
6. Make sure your next paycheck is going to cover the payment that you owe to that payday loans company.
How to look for hidden fees?
There might be a section in the contract or a fine print that people generally don’t take the time to read because they need the money now to get into the store; thus, completely avoid to understand what the interest rates are and what the actual fees are going to be.
Are there any companies that BBB backs?
BBB backs no particular company, it only provides accurate and valid information about companies’ fair practices in relation to their clients. What BBB is looking for is that the service providers are following the state laws, making sure that they are going ahead and disclosing the fees, and the customers are not charged fees that are not disclosed.