According to CNN, nearly 80% of Americans live paycheck to paycheck. This leaves people with almost no options if an emergency arises. When 1,000 people were surveyed, 50% only had enough of a savings to allow them to pay necessary bills for less than three months. Another 27% had absolutely no savings at all. If an emergency arises and you have no savings, you may need to take out a payday loan to make it to your next paycheck. Unfortunately, there are too many scam artists out there praying on people during desperate times. If you are looking to take out a payday loan, know how separate the legitimate companies from the scams. Here are some tips to help you make the distinction.
Look for the CFSA seal
The Community Financial Services Association is an association that regulates the payday loan network in the entire country. Legitimate payday loan companies are certified by the CFSA. If you are shopping around for a payday loan online, you will see the CFSA seal on their web site. If the company doesn't have the seal, look for someone else.
Don't use a third-party lending site
Third-party lending sites seem like a good idea. They attract customers by telling them that they only have to input their information one time and then they will be matched to a lender. This keeps someone from spending hours applying on several different web sites. The downside to third-party lenders is you don't know who all your information is being sent to. Scam companies find ways to get people's contact information from these third-party lending sites to prey on them.
Unsolicited payday loan offers
The third-party lending site leads to the next topic: unsolicited payday loan offers. These most often come in the form of e-mail. E-mails often come after visiting the third-party sites. Although you may not get matched to a scam lender, they manage to obtain the information that you filled out, and send you e-mails with promises of fast money. Don't go with a company that you did not contact first.
While researching a payday loan company, check for a physical address. With scam payday loan companies, you will often find that they have little to no contact information. You may find a phone number, or just a form on the web site to send a message. The illegitimate companies don't use an address so they can change the small details of their company and stay running. You may find that a company has used several different variations of a company name and phone number. Never contact the company if the phone number is outside of the country that you reside in.
Don't perform fishy tasks to get a loan
One common scam is done with prepaid card. A company may tell you that you have to go to the store and buy a prepaid card, then put a certain amount of money on it. Next, you give them the numbers to the prepaid card so they can check the balance. The claim is, that it proves to them that you can make your payments. Giving the numbers to the prepaid card allows the company to transfer all of the money off of it. Using prepaid cards makes the transfer completely untraceable, unlike using a bank account. A legitimate loan company will never ask you to send money or buy prepaid cards before approving a loan. You should never need more than proof of identity and previous bank statements to prove employment.
Payday loans from places like EZ Money can be helpful when you find yourself in a jam. When people become desperate for money, it makes them easy targets for illegitimate businesses. No matter how badly you need the money, do not try to work with a payday loan company that isn't CFSA approved. Make sure they have a physical address and don't ask you to do something suspicious.