Common Cents with BBB - Payday and Car Loans
By: Big 2 News Staff
Updated: December 11, 2012
MIDLAND -- Better Business Bureau is warning consumers looking for payday or car title loans to research a company or website's reputation and read all the fine print before giving your personal information or signing any agreements.
TIPS:
Start with trust. Check out the company's BBB Business Review to see its rating, history of complaints and other information.
Never pay an up-front fee. Some short-term loan providers will ask for a post-dated check to cover the amount you borrowed plus interest and fees. However, if any lender asks for those fees in cash before giving you any money, walk away - especially if it's an online lender asking for money via wire transfer. Charging up-front fees is illegal, and cash sent by wire cannot be traced.
Limit the amount you borrow. Only borrow what you know you can pay off with your first paycheck. Most companies will allow you to "rollover" the balance for several weeks or months, but tack on fees the whole time. This can result in you owing several times what you borrowed in the first place.
Know your rights. In Texas, payday lenders are required to disclose certain information before initiating a loan. That information includes the costs, how it compares to other loans and the interest rate if not paid in full. Members of the military enjoy even more protections, thanks to federal law.
Read the fine print. Pay close attention to fees and consequences of non-payment. Will the company allow you to make arrangements if you cannot pay? How quickly will the company repossess your car?
Keep your documentation. Many consumers said they started receiving calls from collections agencies years after they paid off a payday loan. Some of these calls were simple errors; others were attempts by scammers to collect a debt that is not owed. Protect yourself by having documentation that all loans were paid in full.
Know where to turn. If you feel a lender has committed fraud or taken advantage, file a complaint with BBB, the FTC and the Texas Attorney General.
ADDITIONAL:
This year, BBB has received more than 3,300 complaints nationwide against payday lenders.
Many of those complaints allege fraud - including companies initiating loans or withdrawing money without permission, or calling to collect a debt that the consumer claims was never owed. Other complaints allege poor customer service or unscrupulous collection tactics.
The FTC advises consumers to consider alternatives to payday lending if they need money fast, including small bank loans, credit counseling and credit cards.
TIPS:
Start with trust. Check out the company's BBB Business Review to see its rating, history of complaints and other information.
Never pay an up-front fee. Some short-term loan providers will ask for a post-dated check to cover the amount you borrowed plus interest and fees. However, if any lender asks for those fees in cash before giving you any money, walk away - especially if it's an online lender asking for money via wire transfer. Charging up-front fees is illegal, and cash sent by wire cannot be traced.
Limit the amount you borrow. Only borrow what you know you can pay off with your first paycheck. Most companies will allow you to "rollover" the balance for several weeks or months, but tack on fees the whole time. This can result in you owing several times what you borrowed in the first place.
Know your rights. In Texas, payday lenders are required to disclose certain information before initiating a loan. That information includes the costs, how it compares to other loans and the interest rate if not paid in full. Members of the military enjoy even more protections, thanks to federal law.
Read the fine print. Pay close attention to fees and consequences of non-payment. Will the company allow you to make arrangements if you cannot pay? How quickly will the company repossess your car?
Keep your documentation. Many consumers said they started receiving calls from collections agencies years after they paid off a payday loan. Some of these calls were simple errors; others were attempts by scammers to collect a debt that is not owed. Protect yourself by having documentation that all loans were paid in full.
Know where to turn. If you feel a lender has committed fraud or taken advantage, file a complaint with BBB, the FTC and the Texas Attorney General.
ADDITIONAL:
This year, BBB has received more than 3,300 complaints nationwide against payday lenders.
Many of those complaints allege fraud - including companies initiating loans or withdrawing money without permission, or calling to collect a debt that the consumer claims was never owed. Other complaints allege poor customer service or unscrupulous collection tactics.
The FTC advises consumers to consider alternatives to payday lending if they need money fast, including small bank loans, credit counseling and credit cards.
Comments
These are some really good tips given in this article, but we should not forget to take out a payday loan only in time of extreme need. I know lenders like PaydayLoans@ (http://paydayloansat.com/) for example who suggest to use their service only when there is no other option left. As for car loans, you have to be careful as well, too may scam are out there waiting for you. It is better to look for respectful companies with big data base.
Alicia S.
December 13, 2012 at 1:42 am
I agree with the precautions consumers should take if they are going to take out a car title loan. We are a Car Title Lender and a proud sponsor of the BBB. If you decide you need a car title loan, there are many players in the market but make sure you pick a company which is associated with the BBB. All the major players are members.
John H.
December 10, 2012 at 3:56 pm
