Some people say that payday loans turn into a cycle of debt. As it is true in many instances, it does not need to be when a person needs fast cash refrains from making rash decisions.
What exactly does that mean? Let’s take a look at where some people go wrong with payday loan lenders.
Did you know that there is a competitive market with lenders of payday loans?
Not all payday loan lenders have the same interest rates attached to their loans, nor do they request the same qualification standards. Did you know that there might be some lenders who deny approval followed up from one who approves it? It is true. Responsible online payday loan lenders will take a close look at an individual’s application, inspect the information, and demand a certain income level before approval. Some lenders will only loan a small amount of your paycheck, while others are willing to loan up to half. Most online payday loan companies have an algorithm attached to the loan application that takes all the scrutinizing away. If you are desperate for money, which lender do you chose?
Variables of a Cash Advance
There are also interest differentiations, various fees are charged from company to company. Some will only charge a certain amount for the course of the loan, not including an additional charge for insufficient fees. Still, others will have a set rate, then charge an additional amount if the balance goes beyond the initial payoff period. The payoff time is something to consider when taking out a payday loan. If a lender is willing to loan you half of your next paycheck, is it financially advisable to do so? These are some tough questions that need to be asked of oneself.
More Dangers of Payday Loans
- A lender from overseas or a Native American based lender- Neither one of these payday lenders needs to follow state regulations set for the payday loan industry.
- Pressure- Not shopping around for the lender with the lowest interest because you feel pressured into signing with the company you are speaking to.
- Misinformation- Using a lender who does not disclose fees and policies.
- Not being accountable- Using payday loans for needs since no one asks why you need the loan.
- No contact information- Borrowing from an online company that does not have a working telephone number or someone to answer the line.
- Nonsolicitation-Doing business with a company who contacted you when you have never or not recently applied for a loan.
- No Follow up- Applying for a loan amount you cannot afford to pay back will surely get you into the “cycle of debt” trap which payday loans lenders are so often ridiculed for.
Responsible Payday Lenders Want Responsible Borrowers
It takes a responsible payday loans lender to approve money to a responsible borrower to ensure a success rate for payday loans. When you need money in a hurry, it’s ok to take an extra hour and surf the web to find a few lenders to compare costs. Even better is to take the time to evaluate what you need funds for. Using a payday loan for nonessentials can trap you into a vicious heap of unnecessary debt. Be smart about your money, and try to find a less expensive way to take care of your money emergency. If you do decide that payday loans are your best options, then play it safe and go with a company you can trust.
How to Choose the Right Cash Advance Company
Research, research, and research. That’s how you find the best payday lender for your situation. Mainly, the points of a payday loan are the amount you are paying back and the amount of time you are allowed to pay on it. First, the cash advance company should have a working phone number to talk to a loan representative. Ask them the important questions. Second, make sure what they are charging you makes financial sense. Thirdly, know what amount will be debited from your bank account to pay back the loan. Lastly, and most importantly, once you pay off that emergency loan, get it out of your mind, so you don’t depend on the funds. Remember, this is a short-term loan for financial emergencies. It’s not to buy new shoes, go on a vacation or pay off a credit card. Be smart with these safe payday loans.