The number of bank accounts has decreased by nearly 9 million households since 2021, and according to CNN, nearly a quarter of Americans have used payday loans, pawn shops or rent-to-own services over the past year.
With ever-present storefront and online payday lenders capitalizing on this trend each day, financially strapped borrowers are gaining a wider array of companies to choose from. But even with an increase in selection, some slimy scammers are finding ways to silently seep through the cracks.
With so many payday flavors to pick from, which lenders should leave borrowers pale-faced and making a break for it?
The Sketchy
At the bar, we can all spot a “sketcher” when they walk through.
Sunglasses at night? Check. Polyester Suit? Yep. Grease-slicked hair? You betcha.
Spotting a shady payday lender scam requires a similar kind of review. Are they asking for a fee to obtain the loan? Is the lender’s website without any contact information or credentials, such as a VeriSign identification? Both could be signs of a fraudulent lender.
The Pushy
Many of us have experienced the “Stage 5 Clinger”. Three weeks after meeting and they’re starry-eyed, smitten and pushing an overzealous marriage proposal.
The same kind of problematic pushiness applies to many less-credible lenders. While a bounty of pop-up ads and cheesy advertising can be a blatant sign, check for some more subtle pushes within the fine print. Is the lender promising instant cash for nights out or lavish vacations? A reputable lender should never advertise a fast cash loan to finance the frivolous.
The Ignorant
Although the phrase “you can’t fix stupid” would be a bit harsh to apply to friends and relatives, don’t be afraid to ditch an ignorant payday lender.
Reputable payday lenders should know lending laws in their state and how it relates to their practice. At a storefront lender, is the manager sporting a confused expression when you inquire about fees, rates and policies? Or worse, is the loan agreement unclear or contains blatant errors?
Use your gut instinct when it comes to finding a reputable payday lender. For every scammer there is a reputable lender, so never feel pressured to settle with a questionable company.