A direct payday loan is, as the name would suggest, a loan that comes directly from the lender. The other option is using a broker who will only find you a payday loan after you submit all of your financial information.
These brokers do not actually issue loans, they simply find customers to match with lenders or sell their information to potential lenders. People have to be extra careful when using a service like this. Brokers are often very careless with their personal financial information.
Their websites often make it look like you are applying for a direct payday loan. This is a clever trick they use to collect personal data to auction off to the highest bidder.
Should You Look for a Direct Lender?
Payday loans are not recommended by most financial experts. They are often hesitant to give out any information or advice on these loans at all. If at all possible, you should stay as far away from these loans as you can.
Payday loans should be a last resort. Seek out other means of resolving your financial situation. If there is absolutely no other option for you, make sure you know all the facts about payday loans. Research your lender’s reputation, how they operate, and the specific terms of your loan. This information can only be found out if you are speaking to the lender directly and not through a broker.
Five Reasons Why You Should Stay Away From Brokers
If you absolutely must use a traditional payday loan, be sure to go through a direct lender and not a broker. Still unconvinced? Here are five reasons to stay away from brokers:
- Additional Cost
If these brokers, or lead generators, are charging the lenders, then the lenders will likely pass on those charges to you, the consumer. No matter what, you will be paying.
Some brokers even use their position to work around state laws and regulations by matching customers with lenders in other states or countries. Brokers do not have to follow the same rules as lenders.
- Additional Solicitation
Even if you submit a basic interest form for a payday loan, you will be targeted by brokers and other online lenders. Anybody who thinks they can make money off of you and your payday loan will be knocking on your door. Prepare for your email inbox to be flooded and your voicemail to be full.
Once you submit an interest form, you become a lead in a hidden marketplace. Brokers have very weak privacy policies that have given them the right to sell, rent, or share your information to other businesses. There are no limits to who can buy your information. This includes car dealerships, tax preparers, and other lead generating services.
- Fraud Risk
When you apply for a payday loan through a broker, you must provide your personal data and your checking account information. Direct lenders tell you the terms of the loan before you sign up. Brokers put your personal details up for sale.
They sell your info to anybody who will buy it and this can include fraudsters. These fraudulent companies may claim you took out a loan and debit your checking account without your knowledge. Anytime you have to give out banking information is a risk.
The websites of brokers are designed to look exactly like the websites of direct lenders. They show up high in search results for direct lenders. They are perfectly created to trick customers into giving them their personal information. You must read deeper into the website to discover that they are not, in fact, a lender at all, but a lead generator.
- There is No Accountability
Since brokers are not regulated by the state and are not held to the same standard, they do not have to provide consumers with any information.