Average fees for a payday loan range between fifteen and thirty dollars for every one hundred dollars advanced. The annual percentage rate, (or APR), ranges between four hundred and one thousand APR. One should view the cost of getting the payday loan as a service charge. The loan is great for one in an emergency financial situation. If one is feeling like they have run out of options and are resulting to bouncing checks, pawning personal property, or borrowing money from friends and family, the better solution would be a payday advance loan. The loans are also great for avoiding late payment penalties and negative marks on credit ratings. If appropriately used, payday loans can provide helpful assistance to those with short term cash needs.
Payday advance companies market their product with sound bites, such as; fast, hassle free, and no credit check involved. Many times a customer will here what he or she wants. Usually what one may hear is “quick easy cash”, not “quick easy loan”. It has been found that even though emergency aid may be available, (such as short-term cash to families at zero cost); many people will first turn to a payday lender. People may prefer payday lenders over mainstream financial institutions for many different reasons. Where a financial institution may ask a lot of questions, a payday advance company will not. Financial institutions may also suggest that the customer take a budgeting class and conduct a full credit check.
Most payday loan companies are quick to “hand over” the loan, no suggestions or credit checks. Privacy is another factor in ones choice on choosing a financial institution or payday advance company. A payday loan transaction is more private than one at a credit union or bank. Ordering a loan at a computer has been noted to be simple, rather than sitting at a bank where a lender has access to the customer’s bank account through electronic debit. The main reasons for choosing a payday loan, seems to be that the loan offers customer convenience, speed, simplicity, and neighborhood friendliness.
Credit vs Payday Loans
The essential characteristics of payday loan transactions are different than most traditional forms of credit. When a consumer makes a repayment on a payday loan there are two factors to consider. One must consider the relatively large sum of money due in one lump sum. Generally, the entire principal of the payday loan is repayable within a two week period. The second factor to consider is the failure to make payment. The consumer may believe that failure to make repayment could have dire consequences. Many payday lenders will threaten you with prosecution for failure to honor a check. Unfortunately, repayment of the loan in one lump sum may result to the consumer having no funds to pay for essentials.
It is necessary to note that payday loan consumers are encouraged by the lenders to let the payday loans continuously roll over rather than repaying them. Such characteristics of payday loans are very different from typical forms of credit. Generally, traditional credit has a series of regular payments.
The payments are determined to be affordable by the creditor through underwriting. Other forms of credit like utility bills are inherently different from traditional credit. Payday loans and rent to own transactions which may include information about the payment, or non-payment of these loans are irrelevant and not predictive of the consumer’s willingness to make regular payments on extensions of credit which have been underwritten to determine affordability. For such consumers, payday loans offer a valuable short term financial alternative.
Cash advance payday loans are a great way to borrow money, especially in the case of an emergency. The loan can be done in as quickly as two minutes online, in the comfort of your own home. Before applying for the loan, see if there are any other options. Work your budget or seek financial advice. If you still decide to apply for the loan, be sure you do not excessively apply for one payday loan. Like a credit card, applying too many times can make the lenders become suspicious and prone to objecting your request. Be sure you are truthful on your application.
If you embellish on your answers, the lender may discover that you are lying, and then your application will be automatically rejected. Before choosing to apply for a payday loan, be sure the site you choose has high security and is professional. There should be an email address where you can reach the lender. The lender they should be able to answer all of your questions clearly and professionally. Be sure they have license agreements, by law they are required to have one. Also, be sure the state you reside in allows the license of short-term Cash Advance Stat.
Written by Robert Pokladow:
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