All you want to know about PayDay Loans
What is a payday loan?
We all hear so much about payday loans today so there is nothing surprising about the great amount of confusing information which creates real messes in people’s heads. In this review, we will give clear answers for the most important questions regarding payday loans.
A payday loan is a certain amount of money that a person borrows for a certain period of time under a certain interest rate. The interest rates are usually higher than in the case with a bank loan, but if one pays back in time, he or she will not feel any drastic difference.
A payday loan is repaid fully at one time, meaning that if you borrow $200 today, you are supposed to pay back that $200 plus the interest rate accumulated by the date specified in your loan agreement.
Repayment delay is not a good idea when it comes to payday loans! The amount to pay may then grow and reach an incredible level, which will be really hard to repay!
Before you take payday loan you better in all ways to check the organization in which you want to take a loan. Check the reliability of the organization and reviews about it on the Internet. For example, you can check the phone number in a specialized service for the presence of bad reviews.
How much a payday loan could be?
Speaking about payday loans in the USA, we need to consider a great variety of regulations in different states and even cities. Some states like Georgia ban payday loans, while other districts like the District of Columbia apply interest limitations – up to 24%. The same happens with the maximum loan amount – it may vary from a few hundred to few thousand dollars.
We highly recommend that you check the maximum amount allowed in your area. If you need to borrow more, it would be a reasonable idea to do it somewhere else where the maximum amount for payday loans is higher.
Is it really so expensive?
We have all heard those scary stories about poor people deceived by greedy loan companies. For example, a man from Falls Church, VA borrowed $400 and failed to repay the amount in time. Actually, the delay was pretty small – a couple of weeks – but the amount of indebtedness grew to $4000. Can this be true?
Unfortunately, this is possible, however such a scenario is something exceptional. Taking a payday loan, you need to keep in mind that it must be paid back in time! The companies issuing such loans take high risks – much higher than banks – and they have to charge those huge fines if a borrower does not pay back in time.
Timely repayment will not make you regret taking a payday loan since the average percentage for a good loan company usually does not exceed 400% per year. Such an annual interest rate looks just terrific, doesn’t it? It’s hard to believe that somebody could desire to take a loan with this crazy interest rate!
But don’t hurry up! Customers borrow payday loans for very short periods of time – it may happen that a person takes money one day and repays it the next. The average loan period is 2 weeks, and in this case, the interest rate does not look that bad – you get $100 and pay back $115 in 14 days. Or, let’s say, you take $500 and repay $575 two weeks later.
Rollover is allowed in some states, meaning that if you fail to repay the loan you can pay back the fee only ($15) and pay the loan amount later ($100) – in a month or so. This is the best way to avoid paying horrible fines for delay.
As you see now, the hair raisers telling us about people who borrowed $50 and had to repay $500 may come true, but only if a customer is a careless person who is totally unable to control his or her financial life. Anyway, in this case it doesn’t matter if such a person takes a payday loan or not – financial disaster in inevitable.
Applying for a payday loan online
There are certainly many fast loan offices all around the United States, but the Internet can also be a place to borrow some money. What’s more, today’s industry of online payday loans provides even better levels of service and security than a personal visit to a loan office.
You do not have to worry about factors that may prevent you from getting a loan from a bank like bad credit history or a low credit score. The main advantage of payday loans is availability, and the main advantage of online payment loans is incredible speed.
It takes between few minutes and an hour after submitting the application to get a positive decision. The money is transferred to your personal account within 1 business day.
How to avoid the Loan Trap
Payday loans are available to everyone – it is enough to be 18 years old or older. It doesn’t matter where you work (and if you work at all), how much you earn, and if you are actually capable of repayment. Unsecured loans work for the lender anyway. If you pay back on time – they earn on this and get the money back as planned. If you fail to pay on time – the amount to repay will quickly grow and you will have to give this money sooner or later.
The only more or less effective way to leave the loan trap in case of repayment failure is a rollover as described above. All the other solutions a lender may offer must be avoided.
The worst thing is to agree on an extra loan to repay the current one – that’s how you tighten a stranglehold over yourself. Don’t even think about this!
Payday loans are a powerful tool that may both help and harm. We highly recommend borrowing money only in the case that you are fully – 101% sure – that you can pay it back on time. Even a day of delay will result in a huge fine, so remember that! There is no such thing as a free lunch, but being smart and calm will help you avoid any problems related to payday loans.