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Things to consider when looking for a payday loan
Finding a payday loan provider has never been easier. Go to your favorite search
engine and enter "PaydayLoan". You'll find that the popular search engines will
return millions of indexed pages. The choices of websites about payday loans
are emence. This can only add confusion to an already stressfull time for you.
You may have had an unexpected event or made some poor choices which has
caused your cash shortage and financial stress. Now more than ever, you need to
be very careful when choosing a payday loan provider. Your stress and anxiety
over your finances can lead to poor choices in payday loan providers.
Be very careful when making your payday loan purchase. A number of considerations
need to be made when looking for these types of short term loans. Payday loans should
only be considered as a SHORT TERM solution to your financial crisis.
You need to understand the ramifications of this type of loan. These are high risk,
short term loans made by finance companies, check cashers,and banks. Because
of the high risk, no collateral nature of the loan, you will be required to pay a very high
interest rate. Some annual percentage interest rates can easily exceed 460%.
1) How much will the loan cost?
As an example, if you were to make a $500 loan with a company who charges you a
fee of $20 per $100 borrowed, you would be required to pay $100 every 2 weeks in
interest fees. If it takes you 1 year to pay back the payday loan, it would cost you $3100
in interest and principle. This is an extreme example but I wanted to give you the truth
regarding the costs of payday loans.
With this in mind, the first consideration that needs to be made before you get your
payday loan or even fill out any applications is, "How much does it cost?"
2) Who am I giving my financial information to?
There are a myriad of sites on the web offering payday loans or appearing to offer their loan
services to you. Not all websites asking for your personal financial information are
actual payday loan providers. Some are lead generating sites for the payday loan industry.
Or even worse, they may be bogus sites looking for for your personal financial information
for their own illegal use.
Again, I am not trying to scare you. I just want you to be well aware of the pitfalls that can be
associated with giving your personal financial information to unknown identities. Most
websites will tell you if their are the actual payday lender. They will either tell you on their
home page or on their FAQ page. Please keep in mind, that payday loan providers can and
will have mulitple websites selling their services. So, do not be alarmed if you see multiple
websites that have similar content or have a familiar feel to them.
3) What are the minimum requirements for the payday loan?
Payday loan providers will give you their minimum requirements for their services.
Employment, income, checking account, citizenery, age, and other requirements that
may apply.
Make sure you meeting all requirements before you apply for the payday loan. Many
providers enter applicants into a data base. This data base is shared and used by many
lenders. Mulitple applications can have an effect on whether your payday loan application
is accepted.
4) How much is the maximum payday loan available?
You'll find payday loan sites offering $200, $500, or even $1500 payday loans. Due to the
high risk nature of payday loans, do not expect to receive the maximum loan amount
on your first loan. You will not be given the max loan until you have proven to the
payday loan provider your trustworthiness. This is usually proven after you
have completed mulitple loans. They will slowly bump up your available loan
amount only after they are convinced their risk has been reduced. This is no different
than any other type of loan or credit card. More credit is made available once you have
proven yourself.
5) How much does the payday loan cost?
This is where you should be very carefull. Finance may or may not be listed on the
provider's website. Fees will range anywhere from $10 - $30 per $100 borrowed.
If they the interest are not listed on the website and they only offer that they are lower
than overdraft fees and late charges, they most likely charge $25 to $30 per $100 borrowed.
The industry trend for online payday loan providers offering cheaper loan rates
is changing. You may now see they no longer offer no credit check payday loans.
Again, it is all due to the risk you present to them. By checking your credit, they
can predetermine your credit risk. Even though they charge lower rates, you may not
be able to get a payday loan through them because of your poor credit.
No credit check payday loan providers will normally charge you $20 to $30 per $100
borrowed. 6) What are their repayment terms?
I cannot stress this enough, you should only borrow what you need and only what you
can afford to pay back on your very next payday.
Payday loan providers will normally have multiple payment terms. Make sure you are very
clear on what they are and what requirements they may have before you complete their
online payday loan application.
- You can payoff your loan on your next payday. Some providers may require you to
complete and fax them your written authorization to withdraw the funds on the agreed
upon due date. They may even automatically withdraw the entire amount
(including interest fees) on your next payday. Unless you require an extension.
- If you need to extend your loan, they will require you to log on to your account and
complete a new contract if you wish to extend your loan. If you are short on cash, most if not all,
lenders with gladly allow you to extend your loan. In this case, the interest fess will be
automatically be debited from your checking account.
- You may also have the option of paying down your loan. You extend your loan and pay a
percentage of the principle loan amount. Some payday loan providers will do this automatically
or you need to request this be done. This option is recommended if you are unable to
completely pay your loan off.
Hopefully, this paper will help you in making a better payday loan provider choice. This
is not intended as financial advice. Its only intent is to help you make a better, more
educated choice when considering a payday loan.
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