Payday Loan Scams

Unfortunately, like any aspect of online business, payday loans have come to the attention of scam artists and fraudsters. Although most payday loan companies are legit, occasionally unscrupulous individuals spring up, usually offering deals which are too good to be true.

Here is how to avoid the scammers when looking for a payday loan.



Choose a reputable agent. All of the payday loan companies on our site are trusted, licensed lenders who operate legitimate businesses under the Financial Services Act. Avoid answering advertisments in the classifieds offering cash loans, particularly if they only leave a mobile telephone number. Companies offering loans need a consumer credit license and should always provide these details if asked to do so. You can check a companies consumer credit license at the Office of Fair Trading Site.

Payday Loan companies are required by law to provide an example of Representative Interest. This is a more effective way of checking the cost of a loan than the old APR system which based the interest rate over one year. The interest rates and any charges should be clearly displayed on any loan agreement.

Never pay up front fees to anyone offering to get you a loan. Loan agents work on a commission basis and get their fees from the lender for arranging a loan - not the borrower. Anyone who promises to get you a loan in exchange for cash is disreputable.

Payday Loan Consolidation Services - recently fraudsters have tried to offer a "consolidation" service for payday loans. They offer to take the loan off you and repay it, then you repay them under the agreement. Be very suspicious of this sort of service. Payday loans are designed only for short term lending so there is no need for a consolidation service. What usually happens is that the fraudster doesnt repay the loan at all, so you incur additional charges from the payday lender. If you cannot afford to repay a payday loan on the due date, talk to your lender. In many cases they are willing to extend the loan for a further period, although there may be additional charges.

Payday Loans for the Unemployed
This is another scam which has recently sprung up - payday loans for the unemployed. Although some lender will lend to those who are unemployed - notably Provident, payday loan companies will not. Payday loan companies usually require you to be over the age of 18, a UK resident, and have over £500 a month in earnings. Loans which are available to those who are unemployed and on benefits are known as doorstep loans or emergency loans. These are longer term loans than payday loans and have weekly repayments. They are not payday loans which are for an average of a month and have a sinhle repayment.