Perhaps the newest offer among payday loan providers is the “faxless” option. In order to apply for and receive what lenders refer to as a “payday advance” from an internet provider, in the past, it was necessary to fax checking account and other information to the loan office. Now, (according to the lenders) in order to make it easier and faster for the customer, there is the faxless option. This may just be another way to get consumers to take out one of these expensive loans. Often, when a person feels a pressing need for cash, they will grab onto the first and easiest option that presents itself. At least, in the past, the necessity of faxing information may have given consumers a little time to think about it and investigate other options. Now, the decision can be made impulsively and the transaction completed too quickly to allow even that.

How They Work

All of these short-term loans require that an individual has a checking account and, in the case of walk-in establishments, is willing to provide a post-dated check equal to the amount of the loan plus a fee. These fees are the reason that the Federal Trade Commission and other consumer groups advise consumers to avoid these loans whenever possible. Payday loan companies charge a minimum of $10 per $100 borrowed, which may not sound like a lot, but when you consider that this is equivalent to an annual percentage rate or APR of over 200% and the average credit card APR is 14%, hopefully you will see that there are less expensive borrowing options. In addition, most people are unable to repay the loan in full with their next paycheck. That’s okay, say the payday advance providers, they will simply deduct a renewal fee from your checking account on each and every payday, until you are able to pay the loan in full. The renewal fee is generally equivalent to the initial charge for the loan.

Be Careful

If you must take out one of these loans to cover some emergency situation, there are several precautions to take. First of all, if at all possible, go to a walk-in office. At least you can be sure that you are dealing with a real company and not a scammer. If you do choose to transmit information over the internet, make sure that you are using a secure site, something like “verisign”. In this way you should be able to have some confidence that you will not become the victim of identity theft. Make sure that the company provides you with all information concerning fees up front. They are required to do this by law. Then compare the fees offered by different companies, before you transmit any account information. Be suspicious of companies that do not readily disclose fees, they are probably charging the most.