Avoiding Payday Loan Dangers
You need a small amount of financial
help fast, but you heard payday loans can be expensive and dangerous. What
now? Find out how to avoid the dangers and reap the benefits of payday
loans.
Payday loans may be right for
you if you need some money for a short time and have no other option. Car
repairs, medical emergencies and other unexpected expenses can really strain
your finances. Some weeks last longer than your wages do. So you simply
borrow enough to tide you over until your next payday.
There are
two kinds of payday loans:
1) online payday loans
2) in-person cash advances.
Both kinds of payday loans
are convenient, quick, private and easy.
Convenient: You can
apply for an online payday loan using your computer. You don t have to
deal personally with a loan officer when you apply for or request an extension
for your payday online loan.
Quick: The online payday
loan takes only a short time to complete and usually doesn t require any
other documentation. Web payday loans are approved in minutes--virtually
guaranteed loan approval. The cash could be in your bank account
within a day.
Private: You apply for
an online payday loan at home. No bumping into nosy neighbors while waiting
in line at the bank!
Easy: There are few
online payday loan application requirements. The loan amounts are smaller
than conventional bank loans so the paperwork is less. Generally, you just
need to be at least 18 years old, have a job (so you have a payday) and
earn at least $1000 a month.
Note: a payday cash advance
loan is a little different from the online loan. All you do is give the
lender a post-dated check or some personal information like a credit card
number and you get your cash advance on the spot. When you repay the loan
on payday, you get your check back. Of course, it lacks the convenience
and privacy of applying online.
Avoiding
Payday Loan Dangers
So, what about your friends
warnings? Yes, payday loans can be quite expensive. Interest rates are
high--sometimes as high as 700% a year! You may also be charged other fees.
But you can get around these by following the advice below. A little headwork
can save a lot of headache.
Trust only payday loan
lenders with good reputations. Remember, you re giving them personal financial
information like credit card or checking account numbers so you want to
deal with honest people. On the lender s website, look for the BBB (Better
Business Bureau) logo.
Make sure you check
the annual percent rate (legally, you must be told this) and shop for the
best rate. If you didn't think payday loans could be expensive before,
this APR might be an eye-opener, especially when you remember that credit
card usually offer 7%-27% APR.
A few companies offer
no interest loans to first-time borrowers. Find them. Be aware of the length
of the loan and any other terms to help you choose the best payday loan
lender. Be sure you know the total amount you ll have to repay before you
take the cash.
Always read the fine
print.
Pay the loan when it
is due, on your next payday. The payday loan period may be extended, but
you ll have to pay additional (and large) interest and finance fees. Also,
if you do not repay the loan with your next paycheck, the lender may even
automatically renew the loan by withdrawing the fees from your checking
account. This could cause you to be overdrawn and incur penalties from
both the lender and your bank.
Meet Frank: A Real-World Payday
Loan Story
Frank s car broke down and
he needed $300 fast. Panicking, he went online and chose the first web
payday lender he found. He filled out the simple form and had his money
in his checking account the next day to be repaid in a week. The fee was
$30.
When payday came, Frank couldn
t afford to pay back the $330 so he asked for an extension, which he got
for another $30. So the next payday Frank had to pay $360 to cover his
$300 payday loan.
If Frank continued doing this
for a year, he would end up paying $1560 in fees. Most likely, the lender
wouldn t let the loan ride for that long. But this shows how expensive
the payday loan fees really are, when you compare them with the interest
on bank loans or even credit cards.
What should Frank had done?
Frank should have looked
at more than one web payday lender, checking for the best terms and lowest
interest rate.
After choosing a lender,
he should have checked it out with the Better Business Bureau to be sure
it is reputable.
He should have had a
plan for repaying the web loan before he got the money so that he could
have paid the loan on payday and not needed an extension.
So, how can you do better than
Frank?
Payday loans or cash advances
are lifesavers for short-term, small cash problems. With thought and care,
you can solve your temporary money problems quickly without making your
long-term financial situation worse. Start your search for a great payday
loan at a reputable website today.
Author-Bio: Joel Walsh suggests
you start here to find good lenders of payday loans: http://payday-loan--online.com
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