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If you’re considering taking out a short term loan, you need to find the right lender. Here’s our guide on how to protect yourself and your interests.

Short term loans can really help you get out of a tight spot.

However, it’s vital that you choose the right short term lender. Otherwise, you’ll wind up with an even bigger problem than you began with.

Sifting through all the options may take a bit of time, but it’s definitely worth it. In order to successfully navigate the field and choose the right lender, you should know what to look for and what to avoid.

Are Short Term Loans Safe?

Many people ask themselves whether short term loans are a good idea.

It’s true that there are some horror stories out there, as is the case with any type of lending (just think about people who’ve had negative experiences with even the most respected banks).

But for the most part, short term loans are a safe, highly useful loan solution.

Short term lenders operate under rules and standards established by the law. These rules are made to protect the borrower and ensure you get a fair deal.

Lenders win when they help borrowers. Providing their customers with a positive experience strengthens their reputation and keeps them in business.

So it’s not the case that providers of short term loans are “out to get” borrowers. On the contrary, short term loans make fast cash accessible to people who otherwise not be able to obtain emergency funds from traditional loan sources.

For instance, many people with bad credit qualify for short term loans, even when banks and credit unions reject them.

The reason interest rates for short term loans tend to be slightly higher than with bank personal loans is because of the additional risk these lenders take on. They typically approve borrowers without a credit check and deliver funds within 24 hours.

So, it’s a trade off. Interest that is a bit higher in exchange for flexible requirements and fast financing.

That said, it is important that the lender you select fits all the criteria of legitimacy and trustworthiness.

How to Detect Bad Short Term Loans

Don’t waste your time with scammers.

While most short term loan lenders are good, there are some that want to take advantage of trusting borrowers.

Here’s how to tell if short term loans are a scam.

Make Sure the Lender is Properly Licensed

If someone sets up shop as a payday lender, it’s because their business has been adequately certified and licensed.

If they aren’t, then nothing binds them to comply with the rules that protect the borrower. Doing business with such shady entities could put you and your money at risk.

When you find a company, look them up! The Australian Securities and Investments Commission (ASIC) holds information on the companies that have received the proper certification.

If a given short term lender does not have an Australian Financial Services Licence or an Australian Credit Licence from ASIC, this should be a red flag.

Investigate their Online “Footprints”

The internet has made it possible to gauge the legitimacy of a company by looking at its “social proof.”

Start by googling the lender. What comes up?

Make sure their website looks professional. Their address, phone number, and email should all be listed. Licensing information and terms of services should all be available.

If scam complaints appear, that should be an automatic dealbreaker.

Also look at how much of an online presence they have. Legitimate businesses have Google Places listings with reviews. They’re on Yelp, Angie’s List, and other business directories.

Does the lender you’re researching have a Facebook page with reviews, likes, and regular updates? What about LinkedIn?

Consider all of these questions as you perform your research. What you want is a thorough social profile that and ample evidence that real people have used and are happy with the lender’s service.

Don’t Trust Lenders That Ask for Money in Advance

Real short term lenders don’t ask you to give them money before they lend you money. That’s a common tactic of scammers.

The way professional short term loan providers do it is to simply request bank statements, pay stubs, or other evidence of income they can use to qualify you.

If you’re approved and you accept, the lender hands you the cash and you go on your way. You’re never required to pay anything until the term of your loan is over.

Avoid Short Term Loans with Hidden Fees

A respectable short term lender doesn’t try to play “gotcha” with the fine print.

Before you sign anything, read the terms and conditions of the contract in full. Don’t worry how much time it takes. Be prepared to walk out if necessary.

Keep an eye out for exorbitant interest rates. Find out how much short term lenders are allowed to charge in your locality. Study the industry average to be sure you’re not getting stiffed.

Use Short Term Loans that fit Your Unique Needs

Once you’ve narrowed your pool of options down to the legit lenders, go with the one whose services are tailored to your personal circumstances.

Maybe you want the convenience of online short term loans. With internet-based lenders, you can get approved and have your money deposited without ever having to leave your home.

Pressed for time? Select the service that will give you the cash as soon as you sign.

Maybe you’re currently not employed. But you have a regular income from Social Security. Choose short term loan provider that accept Social Security as a valid form of income.


Finding the right short term loan is an important task. Getting cash fast is important, but it’s also important not to rush into a bad deal.

Doing due diligence on the available lenders will help you find the best terms.

Create a list of options. Look them up to see what experiences past borrowers have had with those lenders.

By sorting out the unlicenced, shady businesses with low social proof, you protect yourself from being scammed.

Then, it’s just a matter of choosing from the offers that best fit your needs.

This process takes some extra time, but you’ll be happy you did it when you’re enjoying the rewards of a quality short term loan.