A direct payday loan is issued by the lender itself, not a broker. Brokers, service providers, and lead generators promise to find you a loan only after you submit substantial financial information. Their job is to find potential customers and match them with a lender or sell their information to lenders. They do not actually issue loans.
It can be difficult to notice the difference between brokers and lenders. The broker’s work hard to make it look like you can apply for a loan on their website. This is just a way they can collect your personal information.
Should I Apply for a Direct Payday Loan via a Direct Lender?
Most financial experts do not recommend getting a payday loan. They are even wary of providing any advice on why or how to apply for a payday loan. They suggest staying away from them all together. If at all possible, try to find another way to resolve your financial issues. Getting a payday loan should be a last resort.
However, if you are set on getting a payday loan and you have no other options, make sure you do your research. It is important to know how the lender operates, their reputation, and the terms of the loan before you sign any agreements. You will not be able to get any of this information unless you are using a direct lender.
5 Reasons Why You Should Avoid Brokers at All Costs
- Additional Costs
For payday loan lenders, it can be expensive to acquire new borrowers. Businesses that can provide those customers charge a bit of money for it. If the lead generator is charging the lender, then the lender will most likely pass that cost onto you, the consumer. If you are using a broker or lead generator, you a likely paying more.
Some brokers even use their status to work around laws that cap interest rates. They can do this by matching you with a lender based in a different state, on a Native American reservation, or in a foreign country. Brokers operate on an entirely different set of rules than lenders.
If you even submit an interest form for a payday loan, you will be targeted by all sorts of brokers, service providers, and online lenders. Anybody who thinks they can make money off of you and your loan will be trying to contact you. You can expect plenty of marketing calls and emails flooding your inbox.
Once you submit your information, you become a potential lead and enter a digital marketplace. Most of these lead generating websites have very minimal privacy protection for consumers. They have an almost unlimited right to share, rent, or sell your information as they please. In some instances, your information may even be sold to car dealerships, tax preparers, and other lead generators.
- Fraud Risk
When you are applying for a payday loan, you must provide your personal information, including your checking account number. When using a direct lender, you know the terms and rates before you apply. With a broker, all of your financial information is out in the open.
Typically they are selling your private information to payday lenders. However, in some cases, they will sell to anybody who will buy it. This opens you up to all sorts of fraud. Any online company that asks for your bank account information is risky.
- Misleading Information
You have to read websites very carefully to discover if they are direct lenders or brokers. The brokers often try to hide this fact very well.
- Lack of Accountability
Payday loan service providers and brokers are not regulated as direct lenders are. Therefore, they are able to perfectly legally distribute your information for their own gain.
How To Find a Direct Lender
Payday loan websites are often very deceptive and confusing. They do not make it clear if they are just generating leads. A broker may have contact information on their website, display a CFSA logo, or explicitly say they are selling payday loans from direct lenders.
There are a few key items to look for on these websites. A broker will not display rates or use its company name as the lender. Instead, it will refer to them as “your lender” or “direct lenders”. Also be on the lookout for websites that require you enter banking information before you view the loan term or rate details. If you really want to be safe with your personal information, apply for your payday loan in person, not online.