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Some Red Flags for Choosing a Payday Loan

When you are dealing with a financial challenge, it is easy to make a bad decision based on urgency instead of information. You may not have the time or credit score to get a traditional loan, which is why you could be considering a payday loan, but you need to be smart choosing your provider. Receiving a payday loan can be quite helpful. It has the ability to offer you the relief you need with a quick cash option. Just remember, for each good loan company there is out there, there are others who are waiting to take advantage of you, so you need to be careful.

Anytime you enter into a financial agreement, you want to make sure that all parties involved are on the up and up. Using an alternative source of funding, outside of a well-established banking institution, can leave you at risk of being scammed, which is why choosing the right payday loan company is essential. There are certain strategies you can use to weed out the unscrupulous providers and choose the right licensed payday loan company for your emergency borrowing needs:

Search the Better Business Bureau (BBB)

Visit the Better Business Bureau website to search the loan company you are considering. If that company follows a good business practice, it will be listed as a company that is BBB accredited. If the company you are searching does not come up in the results, then no matter how good their offer seems, move on.

Do Your Research Online

Starting the search for a provider online can be simple with the help of consumer protection websites like Rip Off Report and Consumer Affairs. Sites like these allow consumers to post reviews and personal experiences they have encountered with a particular company. By doing so, they can assist in determining the legitimacy of the payday loan provider.

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Check the Address of the Loan Company

If the company website has an address listed, take the time to check it out. Drive by the establishment and see if the property is well maintained and open during their posted hours of operation. A legitimate business will take pride in its outward appearance, as well as the quality of services it provides. If the address is a P.O. Box, then that may be your first clue that the company is not legitimate, so be on the alert.

Call the Loan Company 

Dial the contact number listed on the website to see if you can reach a live person. If the number is not listed at all, then that is a definite red flag. If there is an automated system that makes it difficult to actually connect with a representative, then that is also a warning. You should be able to speak with a friendly, informed representative that can explain how the payday loan process works and answer any questions you have. If you have any apprehension about the customer service you receive, take that as a warning to steer clear.


A legitimate loan company will not ask for any type of upfront fee to secure a payday loan. The general rule of thumb is to avoid any loan provider that asks for money at any time during the approval process. If you have been asked to provide money before the first loan payment is due, then it is almost certainly a scam in the making. It may be time to look for another loan company with better credentials.

Navigating the world of payday loans may seem like a daunting task, but there are some key principles to keep in mind during your search. Scammers come and go, but honest, community-based lenders stand the test of time. National chains have the money to advertise and make their presence known, but they are not invested in you or your community. When you stick with who you know and what you know, you can’t go wrong.

Note: The content provided in this article is only for informational purposes, and you should contact your financial advisor about your specific financial situation.

Louis Tully

Louis Tully is a full-time finance writer offering financial expertise to everyday consumers. He understands the core values of finance and used his writing talents to share his own experiences with money to his readers. His articles teach how financial failures can easily become successes by making new habits and creating realistic goals.