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Payday Loans

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This global recession has lead to a great change in the way individuals manage modern day finance. The emergence of the ‘Online Payday Loan’, is one of them. Sure , they’ve always been there in the background. But now more and more people are using them. Utilised in the right fashion they can work well.

Small amounts borrowed online a little before pay day can be paid back without any problem. And of course we all have emergencies from time to time like a car breakdown or a late bill! But sadly many more people on low incomes are being sucked into a trap of multiple instant payday loans and high interest.

WHAT IS A PAYDAY LOAN?

First of all there are many terms for such a loan from ‘Cash Advance Loans’ to ‘Deferred Deposit Loans’, ‘Check Advance Loans’ to ’30 Day Loans’. They are all the same and work in exactly the same way. The applicant applies for amounts of cash ranging from $100 to £1000 and beyond in some cases. Generally you borrow the money for a set period mainly 30 days or a calendar month.

Girl with money and laptop

On your payday the lender, who has your bank card details will take the money back from your account plus interest and any other fees. Normally $20 for every $100 borrowed. If the borrower has problems paying this back on payday then in some cases the loan can be rolled over. In this case there’s a further charge and the consumer can end up paying a lot more than the original sum they borrowed. This is very expensive on the face of things as you’re literally buying money. You probably wouldn’t entertain a credit card with such a high APR – more than 400 per cent in some cases. The truth is you’re paying for the convenience of someone solving a monetary problem for you.

Most companies will look at your credit report but there are others who don’t carry out a credit check. While most reputable lenders are just that! There are some who flout financial regulations and create extra charges just for fun. The fact is if they don’t credit check you then don’t touch them unless you want to take the risk on their reputation!

WHERE CAN I FIND PAYDAY LOANS?

There are shops in the mall who provide such a service subject to you supplying employment and personal details. But these days most payday loan companies can be found online. In most cases for first time customers they will only lend up to a certain amount. If this initial loan is paid back on time then you’ll generally be allowed to borrow more. Some will even give you a loan to be repaid back over the course of three, six or 12 months. Remember the interest rates will be high so compare several of them before taking the plunge. Payday loans online might come with an extra fee for getting the money put into your account quickly! Otherwise it might take a day or two depending on which bank you use. Make sure you shop around and go with the top names whenever possible.

WHAT ARE THE ADVANTAGES?

  • You can quickly find cash when you need it in a hurry for everyday emergencies.
  • Used sporadically and in small amounts payday loans can be of huge benefit.
  • They can cover shortfalls until your next payday.
  • You can get finances into your account from your own home.

WHAT ARE THE DISADVANTAGES?

 

  • This quick cash loan comes with a high rate of interest.
  • Rolling over a loan can quickly get you into financial trouble.
  • There can be various admin charges and fees.
  • Not all companies are what they say they are.

THINGS TO THINK ABOUT?

Pay day loans are not the answer to long term problems – they are only designed to help you in the short term. Make sure you can pay it back on your designated date. Know what you’re getting into before applying and shop around for the best deals. More importantly make sure you fully understand their terms before signing up. Check out the Federal Trade Commission’s website for more information! Legitimate lenders will always show their terms clearly and all fees will be clearly apparent. It’s always a good thing to look at the possibility of borrowing from family or friends first anyway.

If you must use a loan until your next payday then make absolutely sure you remain in full control in terms of being able to pay it back. All good companies will have transparent contact details so it’s possible to speak to a human being at the other end when you need to!

http://www.ftc.gov/bcp/edu/pubs/consumer/telemarketing/tel16.shtm

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