Borrowing Wisely: What to look for in a Loan Service

No matter how well prepared we think we are, life tends to throw us curve balls that can severely impact our financial well-being. You can lose your job, have to deal with an expensive building repair, or have to fix a broken car. If you have nothing in the bank, these unforeseen events can be challenging to cope with and can leave you in a bind financially. Martin Lewis, the founder of, recommends having an emergency fund that will cover at least six months’ worth of bills. Unfortunately, this takes time, but if you need money now, a short-term loan might be the answer. When looking for a short-term loan, there are several things to look for before choosing your lender.

Borrowing Wisely: What to look for in a Loan Service - unexpected bills image

Make Sure They’re Licensed

Anyone can create a professional looking website these days. This makes it extremely easy for companies to set up a new site and start offering online short-term loans. However, they might not be licensed to do so legally. The first steps for you to weed out these kinds of scams is to only deal with companies that are licensed. A lender who has is licensed and legally able to lend you money will display their license directly on their website.

Look for Direct Lenders

Many of the online short-term loan companies on the Internet aren’t actually lenders. While they may advertise that they are a short-term loan company, they are merely collecting your information to send along to a third-party lender. Make sure you are dealing with a direct lender before you fill out an online application form. This will allow you to eliminate the number of companies that have access to your confidential information.

Make Sure the Site is Secure

An authentic lender will always have a secure website. A secure website creates an encrypted connection between their site and your web browser. It prevents online criminals from being able to steal your identity, according to Northeastern University’s Office of Information Security. Before you enter any of your information into the website, make sure that a padlock icon appears next to the website’s URL and the top of the page and that the web address begins with https://. Never override a pop-up that warns that the security certificate for the site is no longer valid.

No Credit Check

Any credible financial lender will at least take a look at your credit report. While they may not make your credit the only criteria for approval or may even be willing to overlook your bad credit, they need to at least review your financial profile. Another reason you want use a company that does credit checks is to be reassured that a legitimate agency, like the credit bureau, has conducted its own background check on the legitimacy of the company to lend you money.

Over the years, short-term loan companies have received a bad reputation because of the practices of a few rotten eggs. By doing your due diligence, you can ensure that you are working with a legitimate company that will help you in your hour of need.