If you're short of cash, should you get a payday loan? Are
they really that helpful?
They can be, if you know how to use them. You can get cash
fast with them if you need to, but you need to be careful,
because they're expensive. It's a law that payday loan
businesses have to post interest rates prominently, so take
careful note of the interest rate you're actually paying
and make sure you know what you're getting into before you
sign the contract.
Here are some things you should know before you decide to
take out a payday loan:
Payday loans are expensive. Their annual percentage rates
run from 200% to upwards of 800% or even more. Some
approach 1000%. That's a lot of money. Even a cash advance
off your credit card isn't going to cost you as much,
usually. That's not to say that cash advances from credit
cards are good, because that's not responsible behavior
either. But if you must have money and you're in a pinch,
even a credit card advance is better than a payday loan,
usually. If you can borrow money from somewhere else, such
as your bank, boss, a friend, family member, or any other
source, it's likely that you'll get a better deal than you
would from a payday lender.
If you decide after considering all your options that you
still have to take a payday loan, shop around. You want the
lowest annual percentage rate you can find, also known as
an APR. One of the best ways to do this is to go online and
check out payday lenders there, to see which of them has
the best rates. Online competition is usually very intense,
so it's likely that you'll get a better rate if you do some
careful research here than if you simply walk into your
neighborhood payday lender and take out a payday loan right
then. The figures you compare should match in terms of
their characteristics, for best comparison. For example,
let's say a company tells you that you'll need to pay them
$10 a week for every hundred dollars you borrow from them.
You'll end up paying $521.43 in interest a year on a $100
cash advance with that setup, though. That's a lot more
than the "$10 a week" sounds like at first not. In
addition, make sure you know what other costs or fees will
be charged you besides when you take out your cash advance.
Make sure you know every single penny you are going to pay
before you sign. This way, you'll know how much are
actually facing in terms of paying back when the time
comes. You should also know what's going to happen if you
have to roll over your loan, which will happen in the event
you can't pay the balance all at once when the loan comes
due.
Finally, read contract very carefully and ask questions if
you're not sure of anything. Do this before you sign. Walk
out of the lender's store with every single question
answered, or don't sign. You should know that some lenders
will try to rush you through the signing process so that
the fine print gets by you, but don't let them. Take your
time and read everything. If you have to, take an unsigned
contract with you and show it to someone else who knows
more about financial matters than you do if you need to. If
the lender balks at any of this, walk away. There are many
payday lenders vying for your business, so if you don't get
every single question answered, you don't have to take it.
You also don't want to sign something that you're going to
be sorry for later.
Next, you need to know what's going to happen to you if you
have to do what's called a "loan rollover." This happens if
you don't have enough to pay back the loan in full on your
next payday, and it's very expensive. Not only will your
annual percentage rate shoot very high, but you continue to
accrue fees and interest. If you have to keep rolling over
your payday loan, you're going to continue to accrue
interest and charges, and this will likely get you in deep
trouble. Because of this, make sure you borrow only as much
as you can repay on the due date and nothing more. If you
don't think this is possible, don't even start.
The longer your cash advances are outstanding, the higher
your APR is going to go. Therefore, you need to borrow not
just the minimum cash possible to get you through a rough
spot, but you need to keep the repayment date as close as
possible, too. Know what the duration of the loan is before
you sign, and note what the due date is.
If you haven't worked with this particular lender before,
go to the Better Business Bureau's website before you
decide to sign on with them and check out the business and
its reputation. You can also check the lender out at your
local Chamber of Commerce. Again, you have rights here and
you need to make sure the lender is reputable.
If you decide that the payday lender you're going to use
will be an online one, make sure the site is secure. There
will usually be a "lock" symbol visible in the browser
window to the right if the site is secure, and the URL
itself will start with "https" instead of "http." The "S"
signifies that the site is secure. Most online providers
use secure sites, but check to make sure, because your
information is in danger if it's not. You need to use a
lender whose site is secure.
If you use an online lender, the procedure is the same as
with a local payday lender. You should be able to read
contract and all the fine print in full before you sign
anything, and lender contact information should be clearly
visible, including a phone number. It's a good idea to call
their phone number and check other customer service before
you sign anything, too, so that you know you're safe. You
can also clarify their policies with them. You should know
all charges and fees you'll be required to pay before you
provide any personal data. Print out the relevant details
and read them carefully; printing out and keeping a hard
copy is a good idea, too, so that if there are any
discrepancies later, you'll have something in print to
verify everything.
Payday loans can be very helpful in the short-term,
providing you absolutely need to use them. However, make
sure you can pay them back right away so they don't get
locked into an endless cycle of debt. You should also know
that many other sources are much better choices if you have
them available, including credit card advances. If you do
decide to take out a payday loan, make sure you can pay it
back right away and that you know everything you're
responsible for before you do so. If you're at all unsure,
walk away. It's not worth a small amount of money up front
if you're going to be locked into a cycle of endless debt
you can't get out of.
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For more information please visit
http://www.paydayloans-online.co.uk/
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