Advance loan applications can be more expensive than you think

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HONOLULU (KHON2) — Short on cash? You may have heard of loan advance applications before, but experts say they’re not all created equal.

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These apps can be useful if you have a bill to pay before your next paycheck arrives. They pay a percentage of your salary, but remember you have to pay it back – and more.

“We all have that moment when we need that extra bit of money, but it’s just an advance on what you’re already earning and you’re going to pay a fee for it.”

Roseann Freitas, BBB Hawaii Market Manager

Some of these apps advertise themselves as free, but the BBB said it’s best to read the fine print.

“It’s just there, a red flag in the scam,” Freitas said. “They have charges. They may be hidden somewhere and listed under a different name, but charges apply. A membership fee or subscription fee or a premium account to access advice or donations.

“No matter how you disguise it, it’s money out of your pocket.”

Roseann Freitas, BBB Hawaii Market Manager

Freitas said if the app asks for a payment before sending the loan, steer clear.

“Charging an upfront fee is actually illegal,” Freitas said of loan advance applications. “You get your loan and you pay it back, but they can’t charge you that upfront fee.”

Other tips for loan advance applications include keeping all documents containing transaction information, in case you need to dispute a charge. Also, search for the app on the Ministry of Trade and Consumer Affairs website to see if it is a registered business in Hawaii.

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If you have a bill that needs to be paid, contact the billing company and see if you can work out a payment plan that fits your budget instead of getting a loan.

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