Vigilance Required While Considering Online Payday Loans

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Payday loan websites are nowadays proliferating on the internet. Through the affiliate marketing mechanism and other internet marketing tactics like email marketing and search engine marketing, online payday loan offerings are gaining momentum. Unfortunately, competition has done contributed to advantage the end user; the borrower.

According to a fresh survey launched by the Consumer Federation of America, online payday loan lenders charge up to 30% of the loan amount and a 650% APR rate. The survey also indicated that means of payment and repayment is ax electronically; which constitutes an increasing risk for the borrower who is required to expose personal and financial information online. According to the survey, there is a huge risk while sending Social Security Numbers, Bank Account Numbers and Salary Slips to online payday loan lenders. While it is understood that these official documents are required to process cash advances, who knows where such sensitive information ends up? Online payday loan borrowers should think about the risk of identity theft which they may face in the future if no proper measures have been taken by the online payday loan lenders or their affiliates to secure the transmitted sensitive data.

As every step from application to repayment is performed electronically, it is often the case that the payday loan lender automatically withdraws the set repayment amount and finances charges from the borrowers’ checking accounts on repayment date. Here again, there is the risk that the borrowers’ checking account has no sufficient funds to sustain the electronic withdrawal request. While such a case arises, the borrowers may face double insufficient funds charges; one levied by the instructing bank or payday Loan Company and the second charge levied by the borrowers’ banking institution.

About Author
Dianne Kelly writes for UK Payday Loans and a number of other leading finance websites.

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