BBB warns of lenders ‘promise of quick cash’
Austin City Council to consider stricter zoning restrictions on auto loan and payday lenders
AUSTIN, Texas - Apr. 26, 2012 – The Austin City Council is holding a public hearing today to consider a new ordinance which would put tighter restrictions on where payday and auto loan lenders can do business.
The ordinance would restrict lenders from operating within 1,000 feet of another lender and would require lenders be located in a free-standing structure. It would also prohibit them from operating in central East Austin and areas near Lady Bird Lake and the University of Texas, among other restrictions.
These restrictions go along with two new bills – House Bill 2592 which requires lenders provide certain disclosures to customers and House Bill 2594 which requires lenders obtain a license from the state – that were passed by the State Legislature last year.
To help consumers avoid high fees and scams, BBB offers the following tips:
· Beware of online lenders offering quick cash. Such lenders claim they are not bound by state and federal regulations and therefore, skirt many of the laws that protect consumers.
· Pay off the loan quickly. A $15 fee isn’t too high if you pay it only once. Extending the loan period means paying multiple fees, making it more difficult to pay down on the original loan amount.
· Do not pay a fee up front. Lenders asking for a fee before they provide the loan are not legitimate.
· Be wary of lenders asking for a wire transfer. Scammers will ask for this type of payment rather than allowing you to mail a check to avoid an additional charge of mail fraud.
· Check the lender’s name closely. Scammers will also use a company name similar to that of a reputable lender. The Texas Attorney General’s office filed suit against a company calling itself City Mortgage, which had no affiliation with Citibank or CitiMortgage.
· If it seems too good to be true, it is. Companies claiming to offer a low interest rate regardless of credit are not trustworthy, according to the Texas Attorney General’s office. The National Foundation for Credit Counseling or the Consumer Credit Counseling Service in your area can help you consolidate debt or get a loan despite poor credit history.
· Check the company’s rating. Visit BBB.org to check out a company’s rating and view customer complaints before dealing with a lender. Remember, the threat of identity theft is high since all lenders require personal information. Unscrupulous companies will use that to their advantage.
To check the reliability of a company and find trustworthy businesses, visit bbb.org.
About Better Business Bureau:
BBB's mission is to be the leader in advancing marketplace trust. BBB accomplishes this mission by creating a community of trustworthy businesses, setting standards for marketplace trust, encouraging and supporting best practices, celebrating marketplace role models and denouncing substandard marketplace behavior.
Businesses that earn BBB Accreditation contractually agree and adhere to the organization's high standards of ethical business behavior. BBB is the preeminent resource to turn to for objective, unbiased information on businesses and charities.Contact BBB serving Central, Coastal, Southwest Texas and the Permian Basin at (512) 445-4748.