The Payday Loan Problem: 4 Easy Tricks For Better Borrowing, To Avoid Predatory Lenders And Unlicensed Agents

A few weeks ago, a friend asked me if they could borrow $20 until next payday, and of course I said, “That’s no problem. Just so we’re clear, though, when is the next payday?”

They looked me right in the eye and said, “How am I supposed to know, you’re the one with the job.”

I’m just kidding, of course, but not about the payday loan part. Those are becoming more and more common, and yes, that’s a problem.

However, it’s not one we can fix right now, so I want to focus on something a little more immediately helpful. I want to talk about how to get the best loans, without getting in trouble, and without costing you more than you might expect.

In the crazy world we live in today, that’s sometimes easier said than done, but there are a few simple tips that can keep you on the straight and narrow, taking loans from only trustworthy sources, and without predatory conditions.

While I can’t simply recommend a single payday loan source, I can tell you the simplest and fastest ways to find the best loans and avoid the worst problems. I recommend these 4 easy tricks to help you find the right lender, right away.

Photo by Moon Bhuyan on Unsplash

1. Deal Directly With Lenders

The first and maybe most important trick to take note of is that not all lenders are created equal. Some are only brokers.

What that means is, instead of lending you money directly, they’re signing you up to borrow money from someone else, and that changes things.

For starters, it means that you’re not actually borrowing from the people you’re talking to, and your contract isn’t with them. Your information is already being sent to multiple parties, maybe even sold, as you’re signing the paperwork.

Keep it simple, keep it local, and deal directly with a lender, not a broker.

2. Know Your Goal

There’s more than one type of loan, even if we exclude all the big ones and only discuss the payday loan or short-term options.

There are installment loans, personal loans, and short-term loans, all of which offer unique benefits and drawbacks.

Knowing what you’re looking for first will really narrow down the options and prevent you from signing onto the wrong type of financial agreement.

I don’t have time to deep dive into them all in this article, but there are some excellent guides online that explain everything you need to know.

Photo by Hunters Race on Unsplash

3. Licensed Lenders

This should probably go without saying, but never, never, ever borrow money from an unlicensed lender. There are no protections in place when you do, and it’s a bad scene.

Instead, look for the license number from your lender before ever signing an agreement, and you can even Google it if you’re in any doubt.

Any lender that doesn’t have a license number displayed, or ready to show customers when asked, is one that you should steer well clear of.

There are many lenders licensed in each state, and they’re always the best option if you’re concerned about legal protections… and you should be.

Photo by Amy Hirschi on Unsplash

4. No Predatory Practices

Last but not least, look for predatory practices, and stay away if you see them.

One of the most common examples is a lender that won’t let you pay off loans early.

They’re not interested in having the loan paid back, they’re interested in the interest, and charging you as much as they possibly can.

Any lender that won’t let you pay back loans early is waving a giant red flag and is certainly best avoided.

The same goes for any company without an easy way to contact a human, with no identifiable company history, or with any hint of illegal advertising attached to their name. If you’re going to borrow some money, make sure it’s not leaving you leashed to a predatory practice that will only cost you more and more in the long run.

The problem with these loans is that the more often you take them, the more often you need them — because each one can cost a little more. That’s not a reason to avoid them altogether, because, let’s be honest, sometimes we need a little top-up to hold us until payday, and that’s just life.

We don’t need to sign up with predators that will try to get us hooked for life, though.

One of the best warning signs is a company that refuses early repayment. If you see anything like that, run, don’t walk, and get the heck out of there.

We all deserve a little financial stability, and predatory lenders aren’t helping us get there. Luckily, we have better options.