Most people have heard of payday loan consolidation companies. There are plenty of them, and they might even advertise on your local TV stations. If not, maybe you’ve spotted one in your city.
If you’ve considered debt consolidation, you might think these companies present a possible opportunity. That assumes, of course, that they are legit. The credibility of payday loan consolidation companies is often questionable. Here’s what you need to know about them:
What is a Payday Loan Consolidation Company?
These business entities offer to let you borrow money. You’ll then use that cash to pay off multiple payday loans. The idea is that you can break the cycle of re-borrowing and having to deal with high-interest debt.
Many people seek payday loan relief. There are many strategies you might use, but payday loan consolidation companies are one of the most popular options these days.
How Legitimate Are These Companies?
These companies are real in the sense that they exist and they’re easy to find. However, their business model is not always one that benefits the average consumer. The payday industry is one that sometimes attracts dishonest people. They might act in bad faith to try and get you to purchase their products and get an online title loan.
There are a few legit payday loan consolidation companies, while others are total scams. There’s also a third category. These are real business entities, but they don’t always assist you in the way that they claim.
If you’re thinking about pursuing this sort of opportunity, it’s critical to pick a legitimate company. There are a few ways you can spot scams. Here are four ways to protect yourself from illegitimate payday loan consolidation companies.
1. No Lending License
Any company you might use needs to have a lending license. That is law, regardless of the state in which you live.
Whether you visit one of these companies in person or call them for details about what they can do for you, ask if they have a lending license. However, it’s possible for one of these companies to post a fake license, so you can go on your state’s licensing website to check and see if they have one as well.
2. No Physical Address
The loan consolidation company not having a physical address is often a dead giveaway that it’s a fraud. Companies that advertise on TV or have a website, but have no listed physical address, are almost always a bad choice.
You can look at their address on Google Maps if they have one listed. That’s one way to tell if they’re a serious company that might be able to help you.
3. Lead Generators
There are real debt consolidation companies, and then there are what this industry calls “lead generators.” These are entities that act as go-betweens. They don’t do consolidation or give out loans. Instead, they rely on internet marketing to capture your contact information. They’ll then sell it to the highest bidder.
If you’re not so sure about a company, ask them if they are a referral service. Any that are should have a disclaimer attached, but they might try to keep that information from you unless you ask them point-blank.
4. Better Business Bureau Ratings
The Better Business Bureau can tell you a lot about a company. If you visit their website and look up the business you’re considering working with, you can probably learn a lot more about it.
If you see several negative reports about that company, it could be a scam. At the very least, they don’t bother addressing customer complaints, which is a red flag.
Be Cautious With These Companies
The bottom line is this: there are a few real payday loan consolidation companies, but many fraudulent ones also exist. If you pay attention to the areas we mentioned, you should be able to tell the difference and pick a credible one.