The difference between predatory lenders and reputable payday lenders
12 January 2013
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When it comes to payday lenders, the truth is that a few predatory lenders have given most payday lenders a bad name. This is unfortunate because payday loans can fill a critical need for cash that many people can or need to take advantage of from time to time. Designed to provide borrowers with a small amount of money that can be used for a short period of time, these loans offer borrowers an ideal way to get by when they are short on cash. If you need extra cash today, you should be aware of the differences between predatory lenders and reputable payday lenders.
Fully Disclosed Loan Charges
Reputable payday lenders are those that make loans within the constraints of the law. All interest rates and loan charges are fully disclosed to you, and they are disclosed in a format that is easy for you to read and understand. While you want to look at the rates and fees associated with a loan before you apply, you also want to read reviews posted online about payday lenders. Pay attention to reviews that talk about lenders charging extra fees that were not originally disclosed to them. This is a sign of a predatory lender.
Responsible Lending Practices
Reputable payday lenders make a point of following responsible lending practices. One of the complaints that others have about payday lenders is that they create a cycle of debt that is difficult for a borrower to break out of. These loans as well as interest charges and fees are generally due in a lump sum payment, and some lenders have allowed borrowers to pay their loan balance off with a new payday loan. The new loan balance essentially will add new interest charges and fees onto the original loan’s balance, interest and fees, and this creates a financial hardship for many people. Responsible lenders, however, fully disclose the amount that is due on the loan due date, and they do not allow the loan to be repaid with a new payday loan. In fact, the most reputable payday lenders limit the number of payday loans that you can apply for within a certain period of time.
It is true that some payday lenders seemingly take advantage of the financial misfortune of some, but others have structured their loan programs and terms in such a way that the payday loans are truly beneficial. As you shop for a payday lender to work with today, pay attention to these factors. To see what a reputable lender looks like, check out My Canada Payday. You can visit their homepage to see all their details. Note their full and frank disclosure of all interest and fees, and their storefront location where you can talk to them in person instead of a faceless voice on a phone.
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