Payday loans are an extraordinarily popular form of borrowing, but they don’t have the best reputation. Why is this? For the most part, payday loans get a bad rap because of the unscrupulous tactics of a handful of lenders that give the rest of the industry a bad name. In addition, some buyers dive into payday loans without fully understanding what they’re getting into, which leaves some borrowers with a bad taste in their mouths. So are payday loans really all that bad? In this post, we’ll answer that question and try to provide some insight into why payday loans have such a negative stigma.

Notorious lenders. Sadly, the unethical practices of just a few lenders can get generalized to an entire industry, which is in part what has happened with payday loans. Before the government regulation that we have today, some payday lenders charged usurious interest rates and were not upfront about their terms. They took advantage of their borrowers, and, in doing so, earned the entire industry a degree of notoriety for being less than upstanding.Outrageous interest rates. The average payday borrower will pay about $15 for every $100 borrowed. This translates into a 400% APR, which means payday loans are, without question, costly cash. However, if they are used infrequently and with discretion, payday loans can be a viable solution to short-term cash flow problems.Uninformed borrowers. The federal Truth in Lending Act mandates that lenders disclose the terms and rates of payday loans in the consumer loan agreement. The APR must be disclosed in this agreement in bold. All of the information that a borrower needs to know is contained in this agreement, but problems arise because few borrowers actually read the document. As a result, interest rates and terms catch the borrower by surprise. To avoid this, read your loan agreement thoroughly and ask your lender any questions you have before you sign.Misuse of the loans. The real danger of payday loans comes when borrowers depend on them chronically. Borrowers who continually roll the loans over for more time eventually bury themselves in finance charges, making it virtually impossible to pay the original loan off. Rather than rolling the loan over when it is due, try to do everything you can to pay it off. Though the additional time may be convenient, it will cost you dearly in finance charges.

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You are likely familiar with payday loans and cash advance loans. The industry has experienced a boom since 2000, with increasing numbers of payday loan retail shops popping up across the United States. These businesses thrive on offering low dollar, short-term loans to consumers who are strapped for cash. However, as an increasing proportion of Americans gain computers and internet access, payday loan businesses have began to operate online, either as extensions of traditional, physical payday loan locations, or as completely internet-based entities. If you have taken out a payday loan the traditional way, in person, or even if you are considering on for the first time, you may not feel comfortable with the safety and legitimacy of online payday lending. However, you can be rest assured that the vast majority of internet payday loan sites are indeed safe and legitimate. Here are some tips and advice you can use to make sure that (a) your payday lending site is a legitimate and trustworthy business and (b) it is safe to give personal information on the payday lending website without the fear of identity theft.

Research several internet payday loan sites before choosing one. Look for lots of advertising, information, and reviews of these sites. This usually indicates a legitimate business.Beware of payday lending sites that ask for some kind of up-front payment. While some may do so legitimately, this should typically be a red-flag that you may have stumbled on a bogus site that is attempting to steal your information.Avoid payday lending sites that guarantee approval. It is fairly easy to get a payday loan, but no one is ever guaranteed without possessing a way to pay the loan back (i.e. bank account, place of employment, etc.)Make sure that you have a secure internet connection. Public computers such as those at libraries or schools are generally NOT secure. If you must use a public computer be sure to close the browser and reboot the computer to ensure your information is not easily retrievable by a stranger. Also, if you use a wireless internet connection from home or elsewhere, make sure it is a secure connection (secure connections require that you know the name and password of the network).Familiarize yourself with the settings and functions of your internet browser. Most will tell you if you are on a secure website with a security icon or some other symbol. Many times the site will tell you that it is secure but always check your browser to make sure.

These tips will help you make sure that you are secure when taking out an online payday loan or when making any kind of internet based transaction where you give out personal information. If you have made the decision to take out an online payday loan, please borrow responsibly, and take care with your personal information.

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