What should I consider if I'm thinking about getting a payday loan online?
Answer: Can you pay it back on time? Do you have other choices besides borrowing? How much will it cost? How safe is my personal information online?
If you are considering an online payday loan, think about:
- How much will it ultimately cost?
- Can you repay or afford this loan?
- How will you repay the loan? Online lenders may not take a check and may ask you to authorize taking an automatic electronic payment from your account.
- Are you on a lead generator site or the site of an actual lender? Lead generators take your information and send it to a network of possible lenders.
- Is the lender’s contact information - street address, phone number, and email address - easy to find on the website or loan application in case there is a problem later? It sometimes is difficult for borrowers to identify and contact online lenders, especially if the borrower needs to revoke the electronic account access.
- Is this lender licensed by your state? You may have more consumer protections if the lender is licensed in your state.
- What happens if you can’t make the payment as scheduled?
- Will the online lender or website protect your Social Security number, checking account number and other personal information? What are the privacy and opt-out policies? Can you restrict the site from selling your personal information?
- Will the online lender pull your credit report? Some online payday lenders will pull a credit report or seek other information from credit reporing companies before giving you a loan. They may want to confirm your identity or see if you have declared bankruptcy.
Any time you give out your sensitive personal and financial information on the internet there are risks. If you apply for payday loans online, you could be increasing that risk. Many websites that advertise payday loans are not actual lenders. They are businesses known as “lead generators,” which make money primarily by findings customers for lenders. It can be hard to tell if the website you click on is a lead generator or an actual lender. Phrases like: “matching you with lenders,” “connecting you with a network of participating lenders,” or something similar, may indicate that you are on a lead generator’s site.
Lead generators will collect your information - including your Social Security and checking account numbers - and then send your request for a payday loan to a network of lenders. Your application will then be sold to the lender that offers to make you a loan. However, that may not stop other lenders or other service providers from calling or emailing you. Lead generators might not find you the lowest cost loans, and you should be cautious of sites that promise they will.
You can submit a complaint about payday loans with the CFPB online or by calling (855) 411-2372. You also may be able to get more information, as well as submit a complaint, from your state regulator or state attorney general.