As the economic downturn has dragged on, here on Sitejabber we’ve seen more and more complaints about online payday loans and other websites offering short-term high interest rate loans. While there might be certain emergencies where high-interest short-term loans could be necessary, most of these loans are not the right choice for most consumers, and we at Sitejabber would like to encourage you to let your friends and family know to steer clear and find alternatives if at all possible.
7 Tips for Avoiding Payday Loan Scams
- Compare APRs: check with your local bank, credit union or other reputable lending institution to see what the annual percentage rates might be on prospective loans
- Look for hidden fees and penalties: many short term loans have hidden fees and penalties, so read the fine print of the loan application to be sure you will not be stuck paying more than you anticipated
- Visit your local bank or credit union: often banks and credit unions will have options for you with better rates than many payday lenders
- Contact creditors as soon as possible: if you think you might have trouble making a loan payment, call you creditors as soon as possible to discuss options
- Contact a local credit counselor: your bank should be able to put you in touch with a local credit counselor who can help you develop a financial plan
- Do not give personal information to untrustworthy websites or businesses: for more information on online privacy see our privacy article
- Check reviews: if shopping for a loan online, check the reviews on Sitejabber first, as well as local scam alerts from your state attorney general
Spread the word and help everyone avoid payday loan scams.
Further reading
FTC: Payday Loan Consumer Alert
NY Times: Payday Loan Exemption in the Financial Reform Legislation
Americans for Fairness in Lending
