How Do I Know If An Online Lender Is Legal And Legit?

Author · Modified on 14 September, 2022

It is extremely important to ensure that the online lender you go with is safe and won’t scam ors take advantage of you as the recipient of a loan. In the US, there are around 23,000 regulated payday lenders. Needing a loan can be stressful in itself, so you should make sure that you are using one of these trusted and legitimate sources of finance.


Key Points:


  • There are around 23,000 legit online lenders operating in the US.
  • When considering a lender, double check that they are regulated on the OLA website or SEC register, or check their status with the Better Business Bureau.
  • Check that their website is legitimate, through ensuring their website is https:, and through looking at online reviews of their service.
  • Avoid scams such as phishing scams or loans that appear dodgy.
  • If you think you’ve been scammed, get in contact with your bank and work with them to resolve the situation.


You should see a padlock symbol on any page that asks you to provide personal information!


How To Check if a Lender is Legitimate?


Steps to Tell if a Website is Legit


Ensure the lender’s site is secure. This means the web address will start “https” and not “http”- the ‘s’ stands for secure.

If the URL starts with “http” only the site may be a scam and is not secure. You should also see a padlock symbol on any pages that ask you to provide personal information.

The padlock means the address is protected from identity thieves. Keep your eyes peeled when it comes to the website of your lender, and this should keep you safe!


Check Reviews Online


A simple Google Search of ‘Dime Alley Reviews’ will tell you that our services are legal and legit and our lenders fully compliant with all regulations!

However, rather than just looking at reviews on the site itself, use a trusted third party that has no relation to your potential lender.

Sites like Trustpilot will be able to give you company reviews from customers. If you cannot find the lender on any third party comparing and reviewing sites, there is a chance they are not legitimate. You could also check out websites that are devoted to preventing web users from scam. For instance, is there to let you know if a website is a scam or not.


Check Terms And Conditions


Carefully read the terms and conditions of your loan before agreeing to anything.

Firstly, if your loan provider doesn’t offer you clear terms and conditions, it will not be a legitimate lender. All legitimate lenders will comply with lending regulations that require lenders to lay out their terms and conditions.

If you feel that you need somebody else to check the terms for you, you could approach a lawyer who deals with these contracts on a regular basis and whose advice you could rely on.


Check They Have An Address And Phone Number


Most legitimate lenders will offer both a physical address and some contact information. If there isn’t any contact information this will raise concerns about the legitimacy of your lender.

If they do have a phone number, definitely give them a call. If you’re able to speak to someone you should get a good sense of the size and legitimacy of the operation. If your calls repeatedly fail to go through, this could be a red flag and an indicator that they are using a dummy number. If this is the case, steer clear!


Check That They Are Regulated


For lenders to be legitimate and trustworthy, they need to be regulated.

To check whether they are, you can see online whether your lender is a member of the OLA or regulated by the SEC? You can always cross-check their details on the OLA website or SEC register and this will confirm their current status.


Check With The Better Business Bureau


Even if the loan company has an online presence, that doesn’t necessarily mean that its operations aren’t predatory. Check the Better Business Bureau website to learn more about whether the lender is worth working with. You’ll typically see a letter grade from A+ to F, along with reasons for the grade.

In some cases, you’ll also be able to read customer reviews, which can give you a better idea of what to expect. If you find that the lender wouldn’t be a good fit, you can also use the website to find one that might be a better one.


Go With Your Gut – Make Sure You Feel Comfortable With The Online Lender!


Lenders want your business, but they shouldn’t be desperate for it. If you feel like the person you’re dealing with is overly aggressive or manipulative, it might be a sign that they’re trying to fluster you and make you feel like you need to make a decision before you get all the facts.

If you feel uncomfortable about the process at any time, take a step back and consider why you feel that way and whether you should continue.


What Should I Do If I Think I Have Been Scammed?


Firstly, contact your bank and freeze or cancel all your cards. This way no one will be able to take money from your account.

You will also need to call the police and report what has happened to you. The police will be able to advise you and you may be able to prevent someone else from being scammed as well.

You may need to purchase new ID, like passports or driving licences, anything that was given to the scammers. You can often report these items as stolen, to protect you in the future.


If you feel uncomfortable about the process at any time, take a step back and consider why you feel that way and whether you should continue.


Top Loan Scams To Avoid


There are two common types of loan scams you’ll want to watch out for. (Both personal loan scams and business loan scams often operate in a similar fashion.) They are:


Advance Fee Loan Scams


Here, loan scammers will promise a loan but will require money upfront to either pay for “insurance” or to make a few payments up front to “demonstrate good faith,” They will typically require these payments to be made with a gift card or prepaid card— either by asking you to mail them the card, or more commonly to read the information from the card to them over the phone. This is different to a cash advance loan where the money is paid to you upfront and repayments are made by you later on.


Phishing Scams


In these scams, someone tries to get you to reveal sensitive information in order to provide you a loan. The loan never materializes but you or your business becomes a victim of identity theft.

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