Q:

What are some good resources for online loans?

A:

Quick Answer

The websites of the Consumer Financial Protection Bureau, the Pew Charitable Trusts and the Federal Trade Commission contain information relating to online loans. More information on the subject is available at the websites of online business loan lender Kabbage and financial educator the Simple Dollar.

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Full Answer

The short-term, small-dollar, high-interest personal loans popularly known as payday loans are generally more expensive when offered online, reports the Pew Charitable Trusts. In addition, a significant number of Internet-based payday loan lenders deliberately encourage long-term indebtedness by, for example, structuring loans to automatically renew. This and other practices, such as overdrawing borrower’s accounts and charging extremely high annual percentage rates, have contributed to the industry’s lousy reputation; 90 percent of complaints made to the Better Business Bureau about payday moneylenders relate to online lenders.

However, not all Web-based lenders have unsavory reputations. NetCredit, an Internet loan provider, made the Simple Dollar’s 2015 list of recommended lenders for individuals with poor credit scores, but the Simple Dollar warns that the company, similar to other online lenders, charges annual percentage rates as high as 299 percent for borrowers with extremely poor scores. To its credit, the lender offers flexible length terms, varied repayment options and unsecured loans that can be as high as $10,000 for borrowers with scores as low as 550.

Fortunately, regulators have cracked down on fraudulent online lenders; in 2015, for example, the Federal Trade Commission recovered $21 million from two firms that had engaged in deceptive lending practices and also ordered them to waive $285 million in uncollected fees, reports the FTC’s website.

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