Individuals are firmly advised to consider all the important precautions when borrowing cash advance loans or payday loans. This type of financing is popular on the market since it provides quick cash lending.
However, before signing up that application, you need to understand the ins and outs and also the possible consequences related to payday lending.
What is Payday Loan?
A payday loan can range from $500 to $1,000. In some States, lenders offer up to $1,500 in advance loan. The limit on the maximum loan value varies depending on the State lending laws governing the lending company.
What about the interest rate?
Lenders that offer payday loans generally impose 100% up to 300% interest rate. A borrower can spend anywhere from $30 to as much as $100 for every $100 cash advance. Some lenders even charge up to 500% APR, especially in States where lending laws have not yet been passed.
A payday loan is required to be paid in full within 30 days.
A borrower should submit full payment by the next paycheck to avoid incurring additional charges. Keep in mind that the interest rates and fees can get you into trouble. If you will prolong payment of a payday loan by the next 2 to 3 months or longer, you could get stuck in a deep debt problem.
Many payday lenders offer their services online.
In fact, consumers who reside in States where payday lending is considered illegal can still acquire financial help through online payday lenders. By submitting your application online, you can expect to get an approval within minutes and receive the cash advance you need within the same day or the next day. Lenders send out the loan to the borrower’s savings account through electronic transfer.
Consumers are warned against illegal lending companies that operate without license.
These lenders may advertise attractive deals which can turn out to be a nightmare later on. You may think that you have a good lender but upon signing up, you might discover hidden charges and excessive interest rates. This is why it’s important to make sure that your chosen payday loan lending company is legitimate and licensed.
Consider other options first before turning to payday lenders for help.
For instance, borrowing from a friend or relative during a time of need can be a more practical option to avoid paying very steep rates and to minimize the risk of bad credit.
On the other hand, if you have decided to acquire a cash advance loan, see to it that you will be able to pay on time.
Here are more tips to remember:
Check the BBB.
Check from the Better Business Bureau if the payday lending company is registered. Find out the rating and the track record of history from the BBB’s website.
Check the lender’s website.
Make sure that the lending company uses a secured website. A secured page always begins with https:// rather than the usual http://. This is important to protect your personal information entered online.
Check the lending laws.
See to it that a potential lender complies with the lending laws of the State where it obtained a license to operate.