What Is a Payday Loan

What Is a Payday Loan?

When considering a payday loan, always make sure you choose a reputable lender. You will be providing your bank account information and income source to the payday loan lender. Your bank account and other information should only be used by the lender for the payday loan transaction. One way to check the reputable nature of a payday loan lender is to read logged comments about those who have already received a payday loan from that lender. See if there are any complaints logged about the payday loan lender. This is especially true of any online payday loan that you take out. Make sure that the lender has a secure site so that putting your bank account information online is not visible to others, and only visible to the payday loan lender.

When considering a payday loan, you should also consider the risks. What are the risks of a payday loan? Fees and interest rates are the two main risks of a payday loan. Fees can be low amounts, but since a payday loan is a micro-loan of no more than $500, the fees can be a large percentage of the payday loan total repay amount. APR interest rates are extremely high for a payday loan. In fact payday loan interest rates are the highest of any other loan in the loan and credit industry.

Some payday loan interest rates can get into the 4 digit percentage range! When you don’t pay-off your payday loan on time you will pay double or triple your payday loan total in interest rate fees. Also, many payday loan lenders double the loan fees every month that your unable to re-pay your payday loan total. If you don’t think you can repay your payday loan on time, the risks are too high.

Since a payday loan is always set for repayment on your very next payday check arrival, this short amount of time may not give you the time you need to come up with the payday loan repayment. Also, since many payday loan agreements require that you write a check to the payday loan lender for the total amount of repayment upon entering the payday loan agreement, your next payday check will be very low for budgeting needs since the payday loan amount will be taken from your bank account automatically upon receipt of your payday check arrival. It would be a good question to ask yourself before taking out a payday loan, is the payday loan necessary or can I wait another week or two for my regular payday? Are the payday loan fees doable for repayment and am I willing and able to pay the payday loan fees and interest rate when the total amount is due?

The advantages of a payday loan are apparent in the title. You get fast cash before your payday. So if you live pay check to pay check and don’t have an emergency stash of cash payday loan is a resource for your insufficient budgeting plan for emergencies. You should use a payday loan in emergencies only. Weight the costs and risks with the advantages of having your fast cash now.

Payday Loan Risks

Since a payday loan is always set for repayment on your very next payday check arrival, this short amount of time may not give you the time you need to come up.