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Summary: 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 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 7Ò7 PR.
• 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.
About the author:
Joel Walsh suggests you start here to find good
lenders of
payday loans
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