5 Essential Tips to Finding the Right Payday Lender

There has been a lot of discussion lately about the costs associated with cash advance or post dated check loans. Consumer advocates and community activists are quick to point out that the annual percentage rates (APR) associated with these types of loans reach into triple digit rates and that the loan may do more harm than good. A broad consensus of lenders and consumers recognize that the payday loan fees are a cheaper alternative to costly bounced check fees or overdraft protection charges that consumers would face without access to short-term credit. Regardless of one's opinion on short term loans there are several factors that potential borrowers should examine prior to getting a cash advance.

First, consumers should look to deal with companies who are members of the Community of Financial Services Association of America (CFSA). Companies that belong to CFSA agree to adhere to its consumer advocacy program and best practices policy. Borrowers who use a CFSA member company are given the assurance that they are dealing with a lender who is registered and licensed in the state where they operate, a lender who promises to limit the fees they charge, and provide a payment plan for consumers who find they cannot pay off their loan on the next payday. Borrowers who shop online should ask the lender if they are member of CFSA and know they are dealing with a reputable lender.

Second, borrowers should also look for the fee chart that clearly illustrates the cost associated with the cash advance loan. A typical fee for an online lender is between $17- and $30- per $100- borrowed. Borrowers should avoid cash advance lenders who charge administrative fees, loan insurance, or other add-on fees. A consumer will pay the fee or finance charge at the same time the amount borrowed is repaid. Loan terms should easy to find in a store or on a website and should be easy to understand.

Third, borrowers who need money longer than a single pay period should find out whether a lender will allow them to extend the loan longer than the initial term. Most lenders will allow borrowers to extend one to four times, but borrowers should make certain that the lender will not automatically extend their loan for them. Consumers should only deal with lenders who extend a loan when it is requested by the borrower. Some unregulated lenders will take advantage of borrowers by automatically extending a customer's loan and charging the customer an additional fee. Reputable lenders leave the choice to extend a loan in the borrower's hands.

Fourth, online borrowers should be able to call, write, or email a lender. If a lender does not post an email address, a contact telephone number, and a mailing address then the lender is probably not interested in resolving consumer concerns. Honest online lenders have different ways consumers can contact them to resolve questions and receive answers regarding the loan. Some unregulated lenders will avoid posting a telephone number or a mailing address to limit the amount of contact they have with their customers. A consumer's inability to contact a lender can lead to confusion on the part of the consumer. Reputable lenders want to discuss customer questions or concerns with their borrowers.

Lastly, borrowers should look for lenders who are well established. There are many lenders that are new to offering short-term loans. Sometimes these lenders can overlook important factors that are critical to a successful loan. Consumers should ask their lender how many years they have been around and how many loans they have serviced. If they have been established at least five or more years they are more likely to resolve any concern or question one may have because they have likely faced similar situations before. Experience in short-term lending does matter. Consumers who use established lenders are likely to have fewer problems.

Most lenders strive to satisfy their consumers' money needs. With increased scrutiny on the short-term lending industry most lenders are taking measures to ensure they offer their consumers additional safeguards and protections. Smart borrowers should review these common sense issues with their lender to ensure that they are not only dealing with a trustworthy lender, but they are also getting a great rate as well. Borrowers should always remember to use cash advances responsibly and remember that cash advance fees are less expensive than returned item fees and overdraft protection charges from other financial institutions.