Tips for Finding a Secure and Honest Lender

With so many different companies offering 'cash advances,' 'payday loans,' or 'installment lending' - it can be difficult to decide which is the most trustworthy organization and which services are right for you.

We asked a few legal and compliance experts to share their advice on how to make sure that the company you choose really has your best interest at heart.

Tips for selecting an internet lender:

• Many states have laws that restrict the amount of fees a licensed lender can charge. You can save money by selecting a licensed lender that is offering loans at the below-market-rate specified by state law. “Bargain” states that have statutory rates below typical unregulated internet rates include: AK, AL, AZ, CA, CO, HI, IN, KS, LA, MI, MS, NM (after 11/1/2007), ND, OH, OK, OR, WA and WY.

• Beware Lenders Not Residing in the USA! If a lender is located outside of the United States and does not have any licensing authority in any state, you may have difficulty in getting a fair resolution if there is a dispute. Licensed lenders are answerable to the states that license them and you have access to the court system in extreme cases of illegal behavior. You will not have these protections with an offshore lender as they are beyond the reach of the US judicial system and state regulators. NOTE: With the amount of personal information you are providing lenders, this should be something that is heavily considered. Look at the “Contact Us” section of a company’s web page and if they don’t offer a U.S. mailing address (or any address at all), they probably don’t want you to find them for a reason.

• Make sure your lender has the authority to make loans in the state where you reside. There are a variety of authorities for issuing short-term unsecured loans in the United States. Many states issue payday loan licenses, check cashing loan licenses, installment loan licenses or similar licenses. It is important to use a lender that has the applicable license because that means that you will have recourse in the event you are issued terms that violate state laws.

• Deal with lenders who are Community Financial Services Association (CFSA) members or a member of one of the state payday lending associations. The lender groups have internal consumer-friendly rules that govern the business practices of members.

• Look for lenders who are members of the Better Business Bureau (BBB) or other consumer groups. The BBB provides a forum for resolving customer disputes in a fair and impartial manner. If the lender wants to maintain membership, they must respond to a complaint.

• Look for the VeriSign Secured logo on the lenders website. This certification will tell you exact who you are dealing with and where they are located.

• Credit Services Organizations (CSO’s) are legal and or licensed in some states and specialize in finding lenders who will extend credit to those who have poor credit ratings or have difficulty in gaining access to credit.

• Several states do not require licenses for internet lenders that do not have offices within the state as long as the lender is licensed in the state they make the loan from. Just because a company is not licensed in your state does not mean that you will not have access to unsecured short-term credit.

A Short History of Online Lending...

The sub-prime lending industry is a growing market consisting of alternative financial institutions servicing the under-banked community. Payday loan providers make up strong contingency in the industry, offering short-term, high-risk loans to customers in need of small amounts of money quickly, often with poor credit scores.

The Brick & Mortar arm of the payday loan industry first took root about 15 years ago and has grown steadily ever since. In 1993 less than 200 payday loan storefronts were scattered across major urban areas. Today, over 22,000 locations serve both urban and rural areas and draw clients from a broad range of demographics. Growth rate in the industry remains steady at about 20% annually.

The online segment of the industry revolutionized the market about three years ago and has shown even faster growth than its Brick & Mortar counterpart. The ease-of-use, speed-of-funding and benefit of privacy have been shown to appeal to payday customers and allowed web-based firms to take a foothold in the sub-prime lending market.

CashNetUSA has been one of the leaders of the online payday market through a secure, speedy and customer-friendly lending approach. Since inception in 2003, CNU has quickly grown to become the leading licensed online lender - offering short-term financial solutions to consumers in over 30 U.S. States and abroad. In 2005, CNU partnered with Cash America Intl. Inc. to create one of the single largest providers of both online and in-store lending options.

Despite CashNetUSA's current role as one of the premier players in the online market, there remains a great opportunity for growth within both domestic and foreign markets. Currently, the online segment makes up less than 20% of the total payday industry. With a dedication to improved and expanded marketing and an eye on the growing consumer demand for quick and simple Internet services, CNU expects to continue to grow at record pace.

Internet Lending Statistics

Sites 450

Average loan balance $0.5 million

Total Internet loan balance $225.0 million

Average fee $ 25

Average loan size $ 300

Loan principal volume $5.625 billion