Choosing The Right Payday Loan Company

By dtagnani | August 19, 2017

Choosing the right payday loan company may not be as challenging as someone might think. State regulators have imposed tough regulations on payday lenders. These regulations have lead to many of the smaller lenders to close their doors. Furthermore, in August of 2013 one of the largest banks that provided automated clearing house processing (ACH) for payday lenders shut the door on processing online payday loans. This left the market scrambling. ACH is how money is transferred to bank accounts as well as how money is debited. It was said that close to 200 online payday lenders closed their doors overnight. Since that time other ACH companies have tightened up on all money transfers from online lenders by imposing tougher guidelines. Conversely, these actions have paved the way for some great companies to rise to the top.

State Licensed Lenders Have Better Value and Service

Before we dive into choosing the right payday loan company, let’s first address the two types of lenders. First, there are state-licensed payday lenders. State licensed lenders follow the laws of each state. Which includes what a company can charge their customers and what needs to be disclosed in their contact to the borrower. This includes payday loans and installment loans. Clearly displayed on their website is a copy of the current license for your state. Since the state regulates the interest you’re sure to get the best rates online.

Pros and Cons

Lower rates
Slightly higher approval requirements
First class service
Phone number clearly stated on website
Next day cash
State regulated

Tribal Lenders May Have Easier Qualifications But Higher Rates

The second type of lender is the “sovereign immunity model” this is where loans are provided through an Indian tribe. In contrast to the state lending model lenders are regulated by the tribe and rates are generally much higher. In a recent phone call with the president of a payday loan software provider, he stated that “tribal leaders have buckled down on lenders using their sovereign immunity”. They wanted lenders under the sovereign model to align themselves closer to the state model. Rates were not discussed in the conversation.

Pros and Cons

Easier to get approved
No traditional credit checks
Higher rates
Regulated by Indian Tribe
Next day cash

Without question, a state licensed lender is going to provide you the best value at the same time better service. Most state model lenders are also part of the (OLA) Online Lenders Alliance. The OLA is the center for lending technology, and innovation representing the growing online lending industry. Additionally, OLA members abide by the best practices and code of conduct to ensure their customers are fully informed. This information is clearly posted on their website. When choosing the right payday loan company here are some of the best lenders.

CashNetUSA
Speedy Cash
Money Tree
LendUp
Advance Financial

These lenders may have slightly higher approval requirements but they do not make traditional credit checks with the big three Experian, Equifax, and Transunion and provide first class service to the borrower.