Payday loans aren't just found at your local pawnshop; large financial companies are also in the business. Banks, credit unions, and financing companies offer services in this subprime lending market. There are also companies that conduct scams. Often these are operated overseas.

Who's Offering Payday Loans

Online you will find thousands of payday loan companies. Many of them simply process or refer applications to larger financing companies. With over $45 billion in payday loans being processed annually, large financial companies, such as Wells Fargo, Citifinancial, and MBNA, have become involved. You will also find regional and small subprime lenders who focus solely on payday loans.

Varying Processes

With FDIC institutions, the application process can be more stringent. Payday loans are known to be high-risk. Larger financing companies try to screen out some applications by requiring higher income levels and researching checking account history.

However, there are niche payday lenders who only require identification, a source of income, and an open checking account. Online payday loan companies also have faxless application, requiring less paperwork.

Besides application differences, payday loan companies also handle payments differently. Traditional companies will require you to write a postdated check, which they will cash on your payday. Online lenders debit your payment automatically. They also wire money directly to your account so you don't have to hassle with waiting for a check to clear at your bank.

Identifying Scammers

Some companies identifying themselves as payday loan companies are actually fishing for your information. These companies are usually located overseas and are difficult to prosecute.

Good sense can protect you from these companies. Don't hand out your financial information to third party sites who promise to refer you. Also look for information on finance fees and payment options. If an offer seems too good to be true, check it out. Contact the lender to speak with a representative. If they are unprepared to answer your financial questions, chances are they aren't legitimate.

Finding The Best Lender

Be sure you compare lenders. By researching online, you can quickly find the best rates and terms. Also, request financial information before you commit to a lender.

About the author:

See my recommended Cheap Payday Loan companies with the lowest rates online. Carrie Reeder is the owner of ABC Loan Guide, which offers help with loans for people with low credit scores