Payday loans are a convenient emergency resource for people who find themselves coming up a little short before payday. Of course, these are unique loans that should not be used for just any purpose, so it is important to know what you are getting into. Everyone wants to tell you that payday lending services are either really good or really bad, but you need to get down to the details and get the real facts about these loans before you apply.
1. Know the Difference Between Lenders and Lender Affiliates
There are hundreds of companies that work as affiliates to connect people to lenders through networking. These are not direct lenders. If you need a payday loan, you need to know the difference and how to ensure you are applying directly with a lender. Lender affiliate networks offer the convenience of filling out one application for dozens of lenders, but that also means that dozens of companies now have your personal, financial, and contact information. Use only trusted, secured sites to apply for payday loans and make sure that you validate the lender you choose before you apply.
2. There May Be Other Options
Payday loans and cash advances are a last resort type of funding. There are lenders that offer personal loans, debt consolidation loans, and other types of funding that may be more practical and less expensive. Interest rates for these loans are exponentially higher than traditional loans, so it is best to explore all of your options and find a less expensive route if you can. In the event of an emergency, however, this very well might be the right choice. You may find more information at Speedy Cash if you need additional resources.
3. Watch For Borrowing Limits (High and Low)
Most payday lenders offer loans up to $500. Some will go as high as $1000, offering more options for people who need emergency funds. However, what a lot of people don’t realize is that some of these loans have minimum amounts. That is, you might find out after applying for a payday loan that you must borrow at least $300 to be approved, for example. If you don’t need that much, you shouldn’t take the loan. Find another lender that offers only the amount that you need.
4. Payday Loans Need Full Repayment Fast
Unlike traditional installment loans, a payday loan is usually bound by terms that require full repayment (including interest and fees) within 14 days, or upon your next payday. Rather than being able to make small payments over time, you will need to repay the full amount at once. Most lenders charge $15 for every $100 borrowed. That means if you borrow $400, you will have to pay back $460 on your next payday, in addition to finance charges or origination fees.
In the event of a financial emergency, a payday loan might be your saving grace. However, it isn’t a good long-term solution for financial issues. Weigh your options carefully and make sure that you work with reputable lenders if you have to use a payday lending service.