How to Check a Payday Loans Company is Safe to Use

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How to Check a Payday Loans Company is Safe to Use

One of the main ways of verifying a payday loans company is safe to use is through checking the Financial Conduct Authority’s register. Also known as the FCA, the industry watchdog has implemented a variety of new and improved regulations to the sector in recent years.

Previously, when payday loans first entered the scene there were very few regulations for payday loan companies to adhere to. There were even fewer that were strictly enforced.

However, payday loan firms started to dominate the news in a hugely negative way. Complaints mounted as many firms were mis-selling loans to vulnerable customers and sometimes using aggressive tactics in order to recuperate debt.  At the same time, these companies were making significant profits.

Partly due to bad press for the sector, 2014 saw huge changes made to the sector largely by FCA, to ensure that payday loan lenders operated in a fairer way.  This included a price cap that came into force in January 2015 that meant interest rates and charges were capped at 0.8% per day. This has helped make the sector much safer to use for customers.

 

Checking the FCA register

 

You can check on the FCA’s website to see if a payday loan company is registered with them. This is an excellent way of determining whether a firm is safe to use. By registering with the FCA, the company has agreed to adhere to high professional lending standards. Failing to adhere to them means potentially expensive financial repercussions for the payday loans company.

Look for reviews online

 

It is always worth looking online for reviews about the company before making an application. This way, you can see what other people have said about the company before you part ways with any personal or financial information.

Check social media

 

What has been said about the company on various social media channels, if anything at all?

You should be wary of any company that appears to be either completely invisible online, or has a series of negative reviews about them on social media.

Uses secure encryption

 

The online application for any payday loan should be securely encrypted. If not, this should signal to you that the payday loans website may not be completely legitimate.

Lenders will use secure encryption technology to ensure that your personal and financial information that you share is kept safe. Things to look out for include whether or not the site has ‘https’ and whether it has an encryption key.

They don’t ask for money upfront

 

It is a huge red flag if a payday lender is asking you to send money upfront. Any fees that you are required to pay will be taken out of your loan amount. You should never be asked to pay anything before you borrow, and this is a huge sign something is a little shady with the firm.

Lack of contact details

 

You should also be looking for genuine contact details on a payday loan site to verify it is safe to use. That means looking for something more than just a contact form or an email address. A legitimate lender will not shy away from providing phone support, an actual address or providing a live chat option on their site.

 

Upfront about fees and charges

 

Payday lenders are required to be clear about the possible fees and charges an applicant may pay when they are applying. Online, and in any agreement, it should clearly state the terms and conditions and any applicable fees and charges about what a payday loan costs. If you find it hard to see these details anywhere, you should be very cautious about going ahead with the lender in question.