The Beginners Guide To Pay Day Loans

Getting a payday loan can be a very scary thing to think about, but in order to make the right decision it is best to fully understand what you are getting yourself into. There are three main factors you need to understand before looking into obtaining a payday loan. Pay day loans are usually for a smaller amount and most lenders require it be paid on your next payday. Also, most lenders require access to your bank account or require you to write a check that will be cashed on your next payday. Most payday loans are required to be paid in lump sum with rollover “interest only” payments, but some do offer installment plans. Payday Loans are sometimes referred to as a “Cash Advance”, but usually a cash advance is required to be paid on the next paycheck.  The term cash advance is also used by credit card companies meaning how much cash on hand you can obtain with your current credit limit.

What Are Pay Day Loans?

The average cost to you for a payday loan can range from 10 to 30 dollars for every 100 dollars borrowed. They can have over a 400 percent APR compared to your average credit card which is around 10 and 30 percent. These fees can usually vary by state, with some states prohibiting payday loans altogether. Banks also offer “Payday Loans” without calling them that, sometimes referring to them as Emergency Loans. They charge similar fees and make it easier for customer with existing accounts. They may also have better repayment options and interest rates. The average interest rate for a bank loan can range from anywhere between 25 percent (with good credit) to upwards of 60 percent. This rate is still much better than your traditional payday loan.

Paydays Loans are most commonly obtained by customers with financial hardships. Subsequently most customers are working with lower credit scores, which makes a payday loan so much more attractive. The risk the loan company is taking is why interest rates are much higher than on a normal loan. The credit requirements for a payday loan are almost non-existent and the money is usually dispersed within 24 hours. Qualifying for a payday loan requires a lot less paperwork compared to other loans. The customer will only need to have a SSN, bank account, and a consistent string of income.

What if I Miss a Payday Loan Payment?

What happens if a customer cannot repay the loan? In the event that the money is unable to be withdrawn due to insufficient funds the lender will continue to charge the account until the payment is collected. This could cause a heap of trouble if you have overdraft fees, etc. coming out. If you cannot make the repayment it would be best to talk with your lender and work out some kind of repayment that suits you best. It is very easy to reach a settlement with these companies because it costs them more money to chase and haggle you. It is in your best interest to pay your loan both in full and on time as quickly as possible. The longer the loan term runs the higher the interest amount obtained by the lender. Also, lenders usually charge a late fee between 15 dollars and 30 dollars if a payment is only a day late. You don’t want any negative asterisks on your credit score, so if you can avoid your loan going to collections do so. Most companies wait 60 to 90 days before turn over your debt to a collections company. If it feels as if you are getting run over or you just don’t know that much about payday loans and how they work there are people there to help. There are special organizations that can give you personal advice on your loan and how to avoid any negative effects. These charities are there to assist people in both the knowledge of a payday loan and the best ways to get them paid off.  These charities can also assist you with getting all your finances in line to avoid a need for a payday loan in the future, or knowing where to turn for payday loan help.

When Should I Apply For A Pay Day Loan?

There are several things you can try before applying for a payday loan. These things can include a loan from a relative, friend, or a coworker. I understand this can create a shady scenario for some people and nobody likes to owe someone money, especially a friend or relative. Paying friends or family back as quickly as possible would be wise to keep relationships healthy. However, it may be a better option when you include the high interest rates of a payday loan. You could also see if there is an option within the company you work for to get an advance on your next paycheck. If you do not have the privilege of asking friends and family there is also another option to consider. Credit Union loans are a lot easier to obtain than your traditional bank loan. Credit unions can be a lot more flexible on both payment plans and also their willingness to except your loan application. They have many short term loan options that may be more suitable then obtaining a payday loan.

Payday Loans can be very attractive in a time of need, but it is best to look at all the options on the table before making a decision. If planned correctly a payday loan can be a much needed boost and can help get you out of a hole. It is best to do a valuable amount of research on your payday loan before applying. Getting a payday loan may seem scary to some people, but sometimes it is the only option. If you manage your finances correctly a payday loan can really help you in a time of need. Just remember a payday loan company is going to make a lot of money off you and you need to do everything in your power to pay them back as soon as possible.

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