Getting an online payday loan is a great alternative to going through traditional lending institutions. You can get a fast and easy decision, avoid all the paperwork, and even receive your funds electronically if you are approved. If you find yourself in need of some fast cash, a payday loan could come in handy. However, it’s important to keep in mind that payday loans are typically for small amounts of money—such as $500 or less—and they should only be used for short-term financial needs. If you find yourself unable to repay your loan on time, the fees and interest costs can quickly mount up. There are a few things you will want to consider before selecting a payday lender.
What is a Payday Loan?
A payday loan is a short-term loan that you can get in between paychecks or at the end of the month. You can access this money quickly, and you don’t need to worry about credit checks, so you won’t have to think about your bad credit history keeping you from getting the money that you need. A payday loan is a short-term loan that’s intended to help you until your next paycheck. Payday loans are often used to pay unexpected expenses like medical bills or car repairs or to cover small gaps in income. If you’ve decided to go ahead with it, you should look for a credible lender online to borrow money from, with clear and fair terms and conditions. It’s important to note that payday loans aren’t the same thing as installment loans, which are longer-term loans with fixed monthly payments. Installment loans have much lower interest rates than payday loans and can be better options for getting out of debt.
Consider the Hidden Costs
Payday loans are a great way to get quick cash when you need it, but it can be easy to forget about the fees involved. What is the cost of a payday loan? The average cost of a payday loan is $15 per $100 borrowed.
There are other costs associated with a payday loan, too. The most common fee is the “credit access fee” which is applied for the first two weeks of a loan. This fee varies by state, but it can be as high as $75. In total, the average borrower pays $17 in fees and interest for every $100 borrowed.
Read the Terms and Conditions
Payday loans are an extremely popular source of money for cash-strapped people. They’re also a major cause of financial problems, as the average payday loan borrower is in debt for five months of the year.
The main reason people end up being stuck paying interest on loans they can’t afford is that they skip the fine print. If you’re applying for a payday loan, it’s essential to read the terms and conditions first. Payday loans come with high-interest rates and thousands of dollars in fees, and if you don’t understand what you’re signing up for, you could end up in more trouble than you were in to start with.
They Are Not a Long-Term Solution
Payday loans can get you out of a bind when you need cash immediately. But, they should not be used as a long-term lending solution. The main reason is the high-interest rate that payday loan companies charge.
The average interest rate for a traditional payday loan is 413%. That is not a typo. You will pay 413% for every dollar you borrow. If you borrow $100 and don’t pay your loan back in two weeks, you will owe $413.
A second reason to avoid payday loans is that they can lead to a cycle of debt. If you have no other options, you may feel like you have no choice but to take out another loan when the first one comes due.
Consider Other Options
Payday loans have become a huge business in the United States. The number of payday loan companies has grown to over 19,000. That’s almost triple the amount of Starbucks in all 50 states.
There are several options out there for people who are looking to borrow some money. Payday loans are not always the only option. You should consider other options, like borrowing from friends and family, before you take out a payday loan. You can apply for an online loan at Sfgate.com.
Payday loans can also be expensive. There are credit cards available with cheaper interest rates. And if you pay off your credit card every month, you’ll never pay a dime in interest.
Don’t Borrow More Than You Need
When taking a payday loan, don’t borrow more than you need. Payday loans can be helpful with getting you through a tight financial spot, but they have to be used responsibly. Overborrowing is one of the biggest reasons why people end up in debt.
If you know that you will not be able to pay back the entire amount borrowed when your next paycheck comes, try cutting down on expenses to make it work instead of borrowing more than you need.
If you are having trouble paying back your payday loan, contact the lender immediately. The lender may be willing to work with you to create a repayment plan that works for your budget.
Will You Have the Money in Time?
If you decide to get a payday loan, you have to make sure that you have the money in time. In failure to do so, you will be faced with extremely costly consequences.
If you cannot repay a payday loan on time, you will be charged an additional fee of up to 10% of the original amount. If you fail to repay your loan within 60 days, the lender can take legal action against you and claim damages.
Payday loans are a form of short-term credit where you borrow an amount of money from a lender for your personal use. If you need some extra cash and don’t want to get hit with overdraft fees, then getting an online payday loan might be the solution for you. Payday loans are extremely easy to get, but they can be difficult to repay. The best way to make sure that you’re getting the loan for the right reasons is by considering these seven factors before applying.