Ensuring responsible use of online short-term loans is the responsibility of both the online lender and the consumer. Below are some tips for educating yourself about the costs and risks of online short-term loans, as well as who to contact in case you find yourself in a difficult situation and need credit counseling, or if you feel that you're being contacted by fraudulent lenders or debt collectors.
1. Never borrow more than you can afford
Sometimes the unavoidable occurs – car repairs, an unexpected illness, or other emergencies that take a bite out of our budget. If you're in a position where you find yourself in need of a short-term loan to bridge a gap, be sure to find out exactly what you are going to be required to pay back, when your payments are due, and how much those payments will be. If you know at the outset that you won't be able to make the payments, taking out a short-term loan might put you in a worse position than you are currently in.
2. Avoid taking out loans with multiple lenders
Most responsible lenders cap the number of times a customer can rollover a loan. Don't try to get around this by using a loan from one payday lender to pay off another. This practice can result in more fees and an endless cycle of debt.
3. Get the most bang for your buck
If you simply sign up for the first company you see online, you can end up paying more than necessary. Comparison shopping online is the smart thing to do when considering signing up for a payday loan. And because the Internet has forced companies to make transparency a top priority, why not shop for the best possible company for the best possible price?
4. Always remember the web site you got your online short-term loan from
It is crucial that you know exactly where your short-term loan is coming from. If you have unexpected problems with paying your loan back, you should contact your lender immediately to try to work out a plan that will allow you pay back the loan without taking a new one or defaulting on the original loan.
5. Keep any paperwork, emails, contacts, and other information you receive from a short-term loan company
This information is equally crucial because it will tell you the terms of the loan, when your payments are due, how much is due, and who to contact in case you have problems. Be sure to keep all of this information in one safe place so you have easy access to it in case you need it.
6. Don't submit personal information like your Social Security number online without checking the security of your personal information
Applying for an online loan requires you to submit personal information including your bank account information. Look for information on the lending website about protection and security of your personal information. OLA encourages its members to display the OLA logo on their websites so consumers can borrow with confidence.
7. If a debt collection agency calls you, even if you recognize the debt, remember to get the following:
- Amount of the debt
- Name of debt collection agency
- Name of the original creditor
- A call-back number to a phone answered by a live person
8. Get Credit Counseling Help
If you find yourself in a situation where you cannot afford your loan payments, get help. There are a number of organizations that can help you with your credit concerns. The Community Financial Education Foundation is a good source of information for consumer tips and budgeting information. Click CFEF to visit the site. Also, the United States Justice Department lists approved credit counseling services by state and judicial district at www.usdoj.gov/ust/eo/bapcpa/ccde/cc_approved.htm.
9. Know who to contact if you think you're being harassed by illegitimate debt collectors
Recently, the Federal Trade Commission shut down a company that was calling consumers and threatening them over debt that had already been paid back. If you think that you're being harassed by debt collectors over money that you don't owe, immediately contact the Federal Trade Commission to report the company or report it to the OLA Consumer Hotline at 1-866-299-7585 or report it online at the OLA fake debt collector form.