Personal Finance

State Licensed Payday Advance vs. Offshore Lenders

When selecting a lender to provide you with payday advance or a cash advance, one of the most important factors to consider is the company's licensing status and physical location.

Many cash advance and payday advance lenders operate under questionable tactics, setting up their businesses offshore or operating in states in which they are not licensed to do business. States employ laws to protect the consumer, and those lenders who operate offshore or are licensed in another state are not subject to the regulations put in place to protect consumers and may conduct predatory lending practices.

Offshore lenders are not to be trusted, setting up their businesses in foreign countries and using legal loopholes to provide service to customers in the United States without any kind of regulation or legal recourse for unsatisfied or less than satisfied customers. When you take a payday advance loan with one of these predatory lenders, they likely won't comply with state or federal regulations, and there's really nothing that you can do about it if you take a loan with them. They may charge higher interest rates, or utilize repayment terms in violation of your home state's requirements.

Similarly, even U.S. based lending operations can employ such questionable tactics by offering loans to consumers in states that they are not licensed in. Lending regulations and laws vary from state to state, and being licensed in one state ensures that the company operates in compliance with those regulations. By offering loans in states in which they are not licensed, consumers are not protected in the way that legislators had in mind. State licensing ensures that the lender charges only acceptable fees and will face repercussions if consumers are unhappy with their services.

Fortunately, new federal case rulings and decisions have been forcing many of these questionable lenders out of business or into full state licensure. However, one can never be too careful and if you're in the market for a cash advance or payday advance, make sure that the company you're dealing with is a legitimate one licensed in your state so that you'll be protected. PayDay One is licensed in every state that it operates, and is just one example of an honest lender that you can feel safe with.