If you’re stuck and need cash quick, a payday loan may be able to help you. While a payday loan may seem a sensible option, it is possible to get into financial difficulty if you fail to learn the facts. The following tips will reduce the probability that something terrible happens when you borrow from a payday lender.
Call around and find out interest rates and fees. Most payday loan companies have similar fees and interest rates, but not all. You may be able to save ten or twenty dollars on your loan if one company offers a lower interest rate. If you often get these loans, the savings will add up.
Before taking the plunge and deciding on a payday loan, consider other sources. The interest rates for payday loans are high and if you have better options, try them first. See if your family will loan you the money, or try a traditional lender. Payday loans should really be a last resort.
One key tip for anyone looking to take out a payday loan is not to accept the first offer you get. Payday loans are not all the same and while they generally have horrible interest rates, there are some that are better than others. See what types of offers you can get and then choose the best one.
If you do not have sufficient funds on your check to pay back the loan, a payday loan company will encourage you to roll the amount over. This only is good for the payday loan company. You will end up trapping yourself and never being able to pay off the loan.
Many times, you will have to have a checking account to take out a payday loan. Most payday lenders prefer to have you authorize automatic direct payments that come from the borrower’s checking account when the loan is due. Get a schedule for these payments and make sure there is enough money in your account.
Make sure you select your payday loan carefully. You should consider how long you are given to pay back the loan and what the interest rates are like before choosing your payday loan. See what your best options are and then make your selection in order to save money.
You must have a current work history before you can qualify to secure a payday loan. The majority of payday loan companies want to see a three month work history before they will give you a loan. Most lenders will need to see documentation like paycheck stubs.
Do some comparison shopping for payday loans. Lenders offer a variety of fees and interest charges. Although you might think you’ve come across a deal that looks good, there is most likely something that is even better. Don’t go with one company until they have been thoroughly researched.
Never ignore the costs involved with a payday loan when you are budgeting your money to pay that loan back. Assuming that you can simply skip a paycheck and have your finances in order can be a costly mistake. Typically, those who get payday loans end up paying back twice what they borrowed. Use this fact to determine your budget.
Do you really need a payday loan? An important thing to keep in mind is that a typical APR is somewhere between 378-780%. Consider that borrowing $500 for a mere two weeks could cost you an additional $125. Although this is a high price to pay, it might be worth the cost if you are in an emergency financial situation.
Payday loans are not federally regulated. Therefore, the rules, fees and interest rates vary from state to state. New York, Arizona and other states have outlawed payday loans so you need to make sure one of these loans is even an option for you. You also need to calculate the amount you will need to repay before accepting a payday loan.
When you apply for a payday loan, you may well find that your best option is to work with a rather distant lender. If this is the case, see if you can find one who will not require you to fax them any documentation. Many people do not own fax machines. Most business charge for each page that must be faxed. This can add up very quickly when faxing your documentation.
Be aware that payday loans are often accompanied by very high interest rates. If possible, see if you can borrow money elsewhere, as payday loans sometimes carry interest upwards of 300%. You may still choose to take a payday loan, but you should be aware of the ultimate costs.
It is important to remember that payday loans should only be used for the short term. If you need to borrow money for a longer time, consider obtaining a different type of loan, such as a line of credit from your bank. Even a credit card can charge less interest and give you a longer period in which to pay back the money.
Although the cost of taking out a payday loan is not cheap, it really only causes large concern when you do not pay the loan back on time. Even with sky-high interest rates, typical payday loans are due in one to two weeks. This does not provide much time for large amounts of interest to accrue. If you cannot afford to pay the loan back in time, however, the interest becomes a big, expensive problem.
The great thing about payday loans is that they can provide you with cash quickly and help get you out of a financial jam. On the flip side, payday loans can end up costing you much more than traditional loans. Use the information you learned here to help you avoid making those costly financial mistakes that so many people do when they take out payday loans.
