Are Payday Loans Safe?


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All I’m hearing all the time from my family, acquaintances, and media is that payday loans are evil and payday lenders are scammers. How to tell if a payday loan is too good to be true? Is there any way one can use this type of products safely? What would you recommend to do in the first place?
– Erika


Answer

A payday loan sounds excellent in theory. It is intended as a short-term loan which you can apply for quickly to receive a small amount of cash fast.

Too Good to be True?

We would love to be able to give you a black-and-white answer here, a simple “yes” or “no,” but the truth is more complicated than that.
Insights on Reputation of Payday Loans

Payday loans have unfortunately garnered a questionable reputation over the years. You may have seen news articles or consumer warnings stating that payday loans are scams.

Payday loans can be safe, so long as you are using them responsibly and applying for them through a legit lender.

Beware the Scammers

But there are unfortunately a lot of scammers who have surfaced to take advantage of vulnerable consumers. These predatory lenders offer payday loan products which are not safe.

Beware Predatory Lenders

Predatory lenders approve customers who cannot afford to pay back their loans. Those consumers end up with compounding interest and fees to pay back. They make them take out additional loans to try and cover old, unpaid loans. They then get trapped in a cycle of debt.

How to Spot Safe Payday Lenders

Safe payday lenders do not operate that way. They carefully screen customers before offering them loans. They may accept consumers with bad credit or no credit, but they make sure that they have the income to pay off the loan.

It is essential to be cautious while you are applying for a payday loan. But so long as you do your homework, you can stay safe and get the cash you need. Here are a few quick tips:

  • Avoid lenders who do not check income or run a soft credit check.
  • Do not deal with pushy or aggressive companies.
  • Make sure the lender is licensed in your state.
  • Carefully read the terms of a loan.
  • Do the math and make sure you can repay the loan on time.

Remember The more you educate yourself, the safer you will be when applying for a payday loan online.

Reviewed by: Casey Bond
Date Reviewed: Mar 05, 2019


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The answer on this page is provided in collaboration with some of our trusted lenders who are proud members of the Online Lender’s Alliance. The purpose of the provided answers is to inform the consumers about the specifics of online lending. It should not be treated as legal advice or regulatory guidance. The information is updated periodically and may include links or references to third-party resources or content. SDL365 does not endorse any third-party nor does it guarantee the accuracy of the third-party information. We encourage you to consult other resources that might serve your needs and take into account your particular situation.

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