PayDay Loans without Credit-Check: Are These Scams or Legit?

If you’ve googled “Payday Loans” or “get loan quickly”, then chances are the sites you’re visiting on your computer are being inundated with ads from payday lenders looking to “solve your financial nightmare and get you the money you deserve”. Many of these ads include an interesting twist on how the lending industry traditionally works by promising borrowers that no credit check will be performed.

This is a leap from the all-too-familiar used car lot banners shouting “bad credit, no problem”. Many of these online payday loan services claim to not even check your credit score. So how can they operate and offer you a short-term lending solution without running your credit history to learn about your history with credit and other lenders? Are these offers fraudulent?

The Big Money of Fake Payday Lending

If I’m looking to make a quick buck, I don’t need to lend you money and collect it back at ridiculous interest rates. Instead I can simply trick you into “applying” for a loan from me. After I’ve collected all of your personal information, I can then send you a message stating that unfortunately I’ll be unable to lend to you due to [fill in the blank BS reason].

Now that I have your information, I can then sell it to a third-party on the black market, or simply steal that information and apply for a loan in your name. Even if your credit history is horrible, a scam artist will usually be able to find some sucker, I mean lender, to advance them money based on your not so great name.

So just because there are a ton of identity thieves out there looking for creative ways to get your information, does that mean that all these “no credit check” payday loans are a scam?

Yes, some “No Credit Check Required” Loans Are Legitimate

As outlined in this Elite Personal Finance article, there are a variety of ways to take advantage of high-interest loans from online lenders. Just because a lender asks you to fill out a form online doesn’t mean they are trying to steal your information. Here are a few tips to look for when deciding whether an online payday lender is legitimate or not.

Check for an SSL Certificate

Is the site you’re asked to enter private information into using a secure connection? Information transmitted over the internet can be intercepted. SSL is a type of website security feature that encrypts the information being transmitted to the site. This technology costs money and many scam websites will not spend the money on encrypting their site communications because they aren’t interested in protecting their, or your reputation.

Google The Company

Google is your best friend when trying to separate the good guys from the bad guys. If there are a ton of negative reviews online for a company, or the majority of users report not being approved for loans as promised, the likelihood that the company is illegitimate goes up.

Read Reviews from Trusted Sites

Websites like MSN Money and Yahoo Finance offer insights into the world of finance. If you can get a hold of the company’s stock ticker symbol, you can look at the information available online about their stock. The information that’s provided to investors by a company is submitted to the Securities and Exchange Commission before being approved and posted online. If a company is listed on the stock exchange and has a generally well-respected reputation on multiple stock analyst sites, then chances are the company is legitimate.

I sincerely hope my insights have given you some tools to better analyze your short-term lending options!