You heard about warnings from different borrowers against payday loans. Payday loans are not generally bad. In fact, it can help you during a dire situation. However, not all lenders are created equal. With this, you need to find the right lender that will understand your needs and can help you survive it.
If it is your first time, here are the things that you need to know prior to taking payday loans:
How it works
There are some lenders that can release the loan amount in a few hours after you filed your application. Once it is approved, the money will be paid directly into your bank account. You need to repay it in full with interest and charges – at the end of the month or the next payday.
Alternatively, you can borrow for longer periods – typically three months. For this type, you need to repay the loan in installments with interest. If you cannot afford to pay it back on time, a payday loan could potentially make your situation worse.
How much it will cost you
You should understand the APR (Annual Percentage Rate). It is the interest you need to pay if you are to borrow money for the whole year. In some cases, APR could spike up to 1,500% compared to the 22.8% APR for a conventional credit card.
You need to know how much it will cost you so you can decide if it is for you or if you can afford it. If you fail to repay on time, you will be charged with default fees plus the interest on the amount that you borrowed.
Recurring payments
Many lenders will ask you to set up CPA (Continuous Payment Authorities), which will allow them to take payments from your bank without checking with you. In most cases, the lender will take directly from your debit card on the repayment date.
Cooling off period
If you change your mind, you should know that you could withdraw from the agreement – any time but within the first fourteen days. You just need to pay the interest on the credit you have used. If there are additional charges, it should be refunded to you.
Final words
Keep in mind that payday loans are short-term loans, which can help you at least until the next payday. The best thing about payday loans is its quick response. If you are struggling with money, you need to talk to somebody today by phone or online to make an informed decision.