The thought of predatory lending is enough to make most people cringe. While some people fully understand there are “lenders” who will take advantage of them, others have no clue that this is a possibility.

In the past, we have discussed the best ways to protect yourself from a payday loan scam. This time around, we are going to take a look at the steps you can take to pinpoint a payday loan scam, thus allowing you to avoid a bad situation altogether.

1. The fine print. All you have to do is read the fine print to get a better idea of what a lender is trying to accomplish. With most payday loans, you will find a red flag in the fine print, such as notice of a super high interest rate or massive fees.
2. Search online for more information. You aren’t the first person to ever consider a payday loan. You also wouldn’t be the first person to fall prey to a scam. You should always learn more about a lender before you decide to do business with them. The internet makes this possible. If others have had a bad experience, chances are that you will as well.
3. Calculate how much it will cost you. Payday loan companies don’t make money by lending you funds at a reasonable interest rate. Instead, they deal in high rates with large fees. To protect against this, you should always calculate how much the loan will cost you over the long run. This is good practice anytime you borrow money, such as with a credit card or car loan.

If you never consider a payday loan you never have to be concern yourself with being scammed. There are better ways to get the money you need, so make sure you consider the alternatives. You will feel better in the end, knowing that you never came close to doing business with somebody who doesn’t have your best interests in mind.

So, you need cash in a hurry? For many, this means one thing: a payday loan.

Before you make this decision, there are a couple things you need to do. First and foremost, consider your alternative options. You may find there is a better, more affordable way to get your hands on the money you need.

Secondly, you should become familiar with the many payday loan scams that are out there. If you aren’t careful, what may not be the best idea in the first place could soon turn worse. For example, you could open yourself up to identity theft.

Here are three things you can do to protect yourself from a payday loan scam:

1. Check to see if the lender has a license. If a payday loan service doesn’t have a license, run the other way. Companies without a license don’t have to comply with state laws, meaning they can do pretty much whatever they want.
2. Search for hidden fees. It goes without saying that a payday loan can be very expensive. But guess what? You may end up spending even more money if you aren’t aware of hidden fees.
3. Don’t put out money upfront. Scammers often times ask for money upfront, such as to cover processing fees. This is one of the top signs of a scam. If somebody asks for money before they can lend you money, they are up to no good.

These are just three of the many things you can do to protect yourself from a payday loan scam. Of course, you have another option: avoid this type of loan altogether. Not only will this help you avoid a scam, but it will likely improve your financial situation. There are other ways to get the money you need.

Despite the fact that most people are familiar with the drawbacks of payday loans, the industry continues to grow.

According to this resource, there are approximately 23,000 payday loan stores in the United States.

Despite the drawbacks, there are many reasons people continue to flock to payday loans. These include:

• Easy to apply and qualify. This is nothing like a bank loan. Instead, you can apply for a payday loan and have the money within 24 hours. This simplicity attracts many people.
• As a short-term loan, you have the opportunity to pay the money back as soon as your next paycheck arrives. Unfortunately, many people neglect to do so, thus getting hit with an extremely high interest charge.
• Easy to find. As noted above, there are more than 20,000 payday loan stores in the United States alone. No matter where you live, you won’t have to look far to find a few stores that are more than willing to do business with you.

As tempting as it may be to apply for a payday loan, don’t let the perceived benefits outweigh the drawbacks.

You must understand that these loans have a high rate of interest. Furthermore, there are many fees that will take money out of your pocket. And if all that isn’t enough, consider this: the terms and conditions always favor the lender, not the borrower.

Payday lenders do their best to appeal to a large audience. This is how they get more business and make more money.

As a consumer, you should realize that the benefits of a payday loan will never outweigh the drawbacks.

With the popularity of payday loans seemingly on the rise, there are bound to be people who are on the fence regarding this financial decision.

The primary benefit of a payday loan is simple: you can take a cash advance against your next paycheck, receiving the funds within 24 hours (most of the time).

While this sounds like a good thing, you don’t want to jump the gun before you take a strong look at the drawbacks. Here is what you need to know:

1. High interest rate. Did you know that some payday loan lenders charge interest at a rate of 100 percent or more? If you don’t have a bullet proof method for repaying the money before the interest kicks in, you could find yourself digging a deep hole.
2. Fees, fees, and more fees. In addition to interest charges, payday lenders make money by assessing a variety of fees, some of which can be quite costly. For example, if you neglect to pay back the loan on time, you could get slapped with a charge of $10 to $20 (on average) for every $100 borrowed.
3. Fine print. Simply put, payday loans favor the lender. If you don’t read the fine print, there is a good chance you could agree to something that isn’t in your best interest. Once you read the fine print, such as the terms and conditions, it is likely that you will run the other way.

Final note: the collection practices of some payday lenders are anything but ethical. In fact, it can be downright scary. If you owe one of these lenders money, especially a company with a bad reputation, don’t be surprised if they make calls to your employers and family members. Furthermore, some take up the practice of making personal threats.

These are just a few of the many potential drawbacks associated with a payday loan. The idea of fast cash may be intriguing, but you could end up worse off in the long run. Is that a risk you are willing to take?