Let’s be honest — when you’re in need of an online loan but don’t want to put in the necessary work to find the best lending option for your situation, you may be tempted to pick a lender at random. Like throwing a dart at a world map to choose the location of your next adventure, it leaves an otherwise difficult decision up to fate. It’s in your best interest to take charge of your financial future by researching your options thoroughly.
Part of finding an online loan with manageable terms and conditions is finding a lender that checks all the right boxes. If you aren’t sure what these boxes are, here’s what you need to know about responsible lenders.
1. They have a license to lend
If you’re sick, you wouldn’t risk your health with a doctor who doesn’t have a medical license. If your outdated house needs rewiring, you wouldn’t trust your safety to an electrician without a license.
So why would you borrow money from a lender that lacks the appropriate certification? Entrusting your financial health to an unlicensed lender can be just as risky as visiting a quack or hiring an unskilled jack-of-all-trades — if not more!
A license proves a lender adheres to individual state lending laws, as well as broader national regulations. Local and federal governments put these rules in place to protect the average borrower from predatory lending, so it’s important you only work with online payday loan direct lenders and Credit Access Businesses (CABs) that have valid licenses.
It shouldn’t be hard to find this information. A lender should display clearly on their website where it can legally conduct business.
Here at MoneyKey, we adhere to all applicable federal and state laws. As of now, we’re a state licensed online direct lender in Alabama, California, Delaware, Idaho, Illinois, Kansas, Mississippi, Missouri, New Mexico, South Dakota, South Carolina, Tennessee, Utah, and Wisconsin. However, we’re growing each year.
In Texas, we’re a licensed CAB — which means we arrange an installment loan between you and an unaffiliated third-party lender.
2. They belong to official lending communities
You can tell a lot about a person by the people they choose to spend their time with — and the same goes for lending companies. You’ll gain greater insight into the way a lender does business by looking to the company it keeps. While a lender doesn’t have a circle of friends and family you can screen, it may belong to financial groups or associations that you can look up.
In many cases, financial associations will have clear mandates and best practices that reveal the kind of principles it (and therefore its members) value. Depending on the community, it may also provide an additional layer of accountability if it upholds its members to review.
Here at MoneyKey, we’re voluntary members of:
- Online Lenders Alliance (OLA): The OLA’s mission is to promote responsible online financial options for consumers. Members have to prove they meet the OLA’s strict standards of conduct and best practices, as well as federal lending laws before they’re admitted. In addition to setting industry standards by which members operate, the OLA also provides an opportunity for consumers to report members that violate its best practices.
3. They take your online security seriously
When faced with strict opening hours and far-away locations, a brick-and-mortar lender isn’t always the easiest way to get the money you need. This old-fashioned method may be slow and awkward.
Online lending, by comparison, is typically a fast process, so it only makes sense to opt for your keyboard over your car keys when you need cash for an urgent bill or repair. You can search for installment loans online anywhere and anytime you have Wi-Fi.
Although this is especially convenient for anyone who works odd hours or lives far away from their nearest bank, it isn’t entirely without downside. In exchange for an easier borrowing experience, you entrust a lender with your financial data online. If you choose a lender that doesn’t protect your personal information properly, it may expose you to the risk of fraud and identity theft.
Luckily, there are certain laws put in place that regulate the way a lender may collect, use, and disclose your personal data online.
Finding this information should never be a challenge. It doesn’t matter where you are on our site, our Privacy Policy is always a link at the bottom of every page.
If you struggle to find the privacy policy of another lender — or if it’s written in complex language that doesn’t help clarify their intentions — this is an enormous warning sign that you should avoid this lender.
In addition to a clear online data management page, you can further protect your information by confirming a lender has the following security features:
- Secure Socket Layer (SSL) encryption: Anytime you find yourself on a lender’s website, look at the URL. Is there an ‘S’ following the HTTP (or Hypertext Transfer Protocol)? If not, Google has already labelled this site as unsecured. Take a look at the top of your window now. You’ll notice we have that important ‘S’ following the HTTP in front of our web address. Standing for secure, this proves we have SSL encryption protecting confidential data any time you exchange information with our site.
- A padlock: Another indication that a site is secure is the fastened padlock in the address bar. Popular browsers (including Chrome, Internet Explorer, Safari, and Mozilla) use this symbol to show a site’s connection is secure. Any other symbol to the left of the address suggests there may not be sufficient security protecting data transferred between your computer and its servers.
These quick and simple visual clues help verify a lender is doing its best to protect your privacy. By checking for these features first, you may avoid wasting time reading the privacy policy of a lender that doesn’t meet these basic security standards.
4. It encourages you to borrow within your limits
Whether you’re shopping for a payday loan or other alternatives like installment loans and personal lines of credit, you’re in the market for a short-term cash flow solution.
Let’s say your child breaks their glasses – in this case, you’ll need to pay for a new pair, even if you don’t have enough savings to cover the full cost of the replacement. An online loan or line of credit bridges the gap left by your paycheck and savings, so you can take on this essential purchase.
However, keep in mind that these types of loans are not a way to boost your purchasing power for unnecessary splurge items or to provide funds to achieve your long-term financial goals.
Perhaps a few years later, your teen decides they want a pair of prescription Ray Band sunglasses outside of your budget – in that scenario, it would not be advisable to use a short term loan to cover this cost. Neither are they practical alternatives to student loans. If your child has plans to earn a degree, there are other loans better suited for their needs.
Any lender that suggests you take out a short-term loan or line of credit for unnecessary expenses or long-term goals doesn’t have your financial well-being in mind. These short-term loans are for emergencies only.
Regular readers of our blog will know that we warn consumers against using a payday loan to cover regular expenses that you expect every month. This is just one of the features of our responsible lending policy.
As a responsible lender, MoneyKey also:
- Encourages borrowers to use a cash advance for unexpected expenses, unavoidable repairs, and other non-recurring emergencies
- Discloses the rates, terms, and conditions of our loans in clear and easy-to-understand language, so you know the different options available and you understand how much you owe
- Urges customers facing chronic financial issues to pursue credit counseling, education, and assistance
- Never engages in abuse or intimidation tactics when collecting an online loan
What does each point have in common? Transparency. Open communications between you and your lender helps you make an informed decision regarding your loan, so make sure your lender is always clear about its services, products, and intentions.
5. It has a good reputation
Once you’ve found lenders that meet all of the above criteria, it’s time to confirm all the good stuff you’ve read matches up with what others have to say about these companies.
Luckily for you, it’s never been easier to do just that. You can carry out a full-blown investigation without ever having to leave the comfort of your couch. Just open up a new tab and see what other borrowers have to say about any lender on your list.
These reviews will provide valuable insight into the way a lender treats its customers. They help you evaluate the claims a lender makes on their website by showing the borrowing process from the customer’s point of view.
If you want to know more about a potential lender, check in with these websites to help you determine which company is best for your needs:
- TrustPilot: As a popular consumer review website, TrustPilot asks verified customers to rate their experience with a company on a 5-star scale. Based on more than 1,800 reviews, MoneyKey has 4 out of 5 stars at the time this article was published. Most customers (or 76 percent) rated our services as “excellent” because of how quickly we connect borrowers with the cash they need.
- Financer.com: With a laser focus on lenders, Financer.com compares installment loans, payday loans, and other online options to help borrowers find the best one for their needs. It also uses a 5-star scale to help quantify customers’ experiences with customer support, interest and other loan costs, flexibility and loan terms, and website functionality. At the time this article was published, MoneyKey averages a 3.7 out of 5 stars.
- The App Store: As more online lenders move the borrowing experience to a mobile platform, the chances you’ll want to access information about your loan through an app are higher now than ever. If you have an iPhone, be sure to check the app’s rating in the App Store before you download it. Currently, MoneyKey Mobile Loans has a 4.4 out of 5 stars for the app’s functionality and our overall service.
- Google Play Store: For those with an Android, you’ll find mobile loan apps in Google’s Play Store. It also has a rating system to ensure the quality of apps available, so be sure to check what other Android users have to say. At this time, MoneyKey Mobile Loans app has 3 out of 5 stars.
A good review hinges on a lender’s ability to deliver a loan and its level of customer service. With a simple and convenient online borrowing experience backed up by a dedicated Customer Care team, we consistently impress our customers.
A good lender isn’t hard to find
Whether it’s your first time or your tenth, getting a loan can be a daunting task. Between comparing rates and making sure you qualify, you may not feel up to adding one more chore to your plate by screening your lender.
But as the source of your cash advance, a lender dictates everything from how much money you’re eligible to receive to when you have to pay it all back. And let’s not forget, it controls rates and conditions that require you to pay back interest and other fees in addition to the principal.
Although there are laws regulating lenders in the States, there is still wiggle room that allows each lender to differ from the next — this includes their products’ rates, terms, and conditions.
Don’t go into your next loan thinking you’ll receive the same terms from every lender. Confirm you’re getting the best option for your finances by using this guide as a rubric the next time you’re on the market for an installment loan or line of credit. If a lender commits to these five principles of responsible lending, it is more likely to have your financial well-being in mind.
