Payday loans – Know the truth about it
Every loan companies and private loan lenders have started to offer payday loan to its customers. The payday loan lending industry is becoming popular as most people prefer getting this loan than getting a person loan to meet immediate financial need. Here are some things revealing the truth about this loan. Payday loans are costly as they are provided by lenders with no credit check. People who are thinking to get this offer should use this loan with more caution. They have to pay back the amount as quick as possible. These loans are priced at a certain fee representing the loan charge to the borrowers. The cost of this loan is high because it has short terms. In return for this loan, borrows usually provide the creditor with a debit authorization in the form of a pre-dated bank check.
How does a payday loan work?
For instance, if your car broke down, you need to have cash in hand for the repairs. In case, you do not have money, you may consider borrowing money from a payday loan lender. If you are getting 200 dollars for the repairs, you need to write a pre-dated check for about 240 dollars which is made payable to your lender. The additional 40 dollars is the finance fee charged by the loan lender and it may vary from one lender to another. When the loan due date is up, you have to pay the lender 240 dollars in cash. If you failed to pay the debt, you will have to pay additional fees for late payments. This is how a payday loan works.
Anyone with a steady income and checking account can get this loan. However, it has been the idea option for people who do not have savings account or credit cards. Since this type of loan does not need a credit check, anyone with credit problems or no credit can turn to this loan. Recent immigrants and military personnel also use these loans. Before a person considers applying for this loan, he should consider his funding options. He has to ask himself if it is an emergency. Payday loan is helpful for emergency costs like medical fees and electricity bills. It is not a good option for funding unwanted expenses.
Benefits of a payday loan
Here are the benefits of obtaining a payday loan to manage immediate cash requirements.
- Applying for this loan is very easy due to a few limitations set by the lender. Even a person with poor credit can get this loan easily. This means anyone with sufficient income can easily get qualified for this loan.
- When people apply for this loan, their banking and personal information is secured by the loan lenders.
- Filling out an online application and receiving the cash advance in the bank account takes few minutes. Many lenders offer candidates 1 hour guarantee for obtaining the money after they approve the loan request.
- Payday loans are also known as short term loans. People can pay back the loans easily when they get their next check.
- The income of a person limits the amount he can borrow and this makes it easier for him to pay the loan before the due date is reached. This helps him to prevent the debt cycle.
- Payday loan has no restrictions as it can be used for anything the borrower wish.
- Payday loan lenders are open even after the regular banking hours are closed. This means people can acquire emergency fund at any time. Even the online presence of these lenders makes it easier for people to apply for payday loans.
How to find the best payday loan lender
Most people run to lenders offering payday loan. Since there are several loan providers out there, it is very important that you select the best payday loan lender. If you do not know how to choose the right lender, follow these tips.
- Before anything else, people have to make sure that the loan lender they are making deal with is licensed to run in the state or country. This means the loan lender have to be legitimate in this business. People can check the lender with BBB in their state to make sure that they are borrowing money from a reputed company.
- Payday loan companies make it easy for people to avail this type of financing. Even there are companies offering one hour payday loan processing. But, the option of loan lender should not be decided depending on how fast the lender offers loan. People have to check the rate of interest charged by the lender on the loan amount because he may charge exorbitant fees. If you do not wish to pay an interest rate which is bigger than the loan amount, you should consider this very important.
- Apart from the rate of interest, people have to read the terms and conditions set by the lender on the payday loans. It is best to obtain loan quotes from many lenders so that people could compare which lender can offer them the best deal.
Things to do before applying for a loan
It is very important to consider the loan options before applying for a payday loan. Since the interest rate for this loan can be high, people have to ensure that if the current situation is really an emergency to get a payday loan. If the situation is not an emergency, people can look for other cash advance options. They can ask friends or family to get immediate fund help. Even they can apply for a small loan or personal loan. They can ask the creditor for extra time to pay the bill. If you have a savings account, you can borrow money from it. If a person has evaluated all his options and chooses the payday loan option is right for him, he has to shop around for the trusted payday lenders offering lower fees and interest rates. It is easy to find a good lender over the web through reviews and customer testimonials.