Opting for a loan is always risky as different types of loans have unique risks. That is why it is essential to understand these pitfalls beforehand and not fall into them. However, if you are thinking of opting for payday loans, you are in the right place. Here are the top pitfalls of a payday loan when you contemplate using this type of financial tool.
Payday Loan – Watch Out for these Problems
Unlicensed Lenders
Many first-time borrowers make the mistake of opting for an unlicensed lender. They are known as loan sharks, and you should avoid them at all costs. They don’t follow state laws, and their practices are meant to take advantage of people. Here are a few things loan sharks do:
- Trick borrowers into a debt trap
- Charge incredibly high interest rates
- Practice illegal debt collection
To ensure that your lender is licensed, you should contact your state attorney general or regulator. They will confirm the legitimacy of the lender.
Hidden Charges
Before opting for a payday loan, you should always ask the lender about the fees they might charge you. Some standard hidden fees that lenders may charge include:
- Customer service fees
- Late payment fees
- Loan application fees
- Overdraft fees
- Returned check fees
Communicate clearly with your lender and understand if they charge any hidden fees. After all, you don’t want to be surprised with charges after receiving the loan.
Middlemen
A middleman is an institution that will not lend you the money directly. Avoid having to go through various companies that act as middlemen to receive the money. When you go through multiple companies, each will have your personal information and charge you a fee. It is always better to select a loan from a direct lender. Doing so decreases your costs and is a safer option.
Cash Fast Loan Centers
If you are thinking of opting for a payday loan, be sure to avoid these mistakes—Research several loan companies before choosing the one that best suits you. Contact Cash Fast Loan Centers and see what we can do for you.