If you have ever had a temporary financial crisis, perhaps you have considered getting a
payday loan or cash advance. Most people already know about the exorbitant finance charges
that these loans normally carry. These charges can work out to more than an 800% interest
rate when annualized, so their use should be considered a last resort. It is easy to begin to
rely on them more and more frequently, until you find yourself in a vicious cycle of debt.
When you feel that your financial situation necessitates getting a payday loan, you have a
variety of options. Much to the chagrin of many lawmakers, payday lenders have proliferated
in recent years throughout the US and Canada. If you don't live in an area where you have
access to a payday lender locally, you have many choices online. In fact, there are so many
choices that the average consumer may have a difficult time deciding on a lender. Here's a
checklist of some things to look for when shopping for a payday loan:
How much is the finance charge? Most online companies offering cash advance loans
charge from $80 to $150 in fees for a typical $500 payday loan with a term of 14 days, or an
annualized rate from about 400% to 800%. Not a real bargain, but you can still save money
by taking the time to compare several lenders.
What is the maximum amount that the company will lend? Payday lenders will loan anywhere
from several hundred dollars, up to $2000 or more in some instances. The exact amount will
be determined by a number of factors, like your wages and employment history. Many payday
loan companies will increase the amount they are willing to extend you with each successive
loan you get from them. Just don't borrow more than you need to cover your financial
situation, because the finance charges can be astronomical, especially with larger loans.
How quickly can you have the money? Times vary from lender to lender, but most storefront
payday lenders will process your loan as soon as you are approved. You will have the money
immediately. Doing business with an online payday loan company will take slightly longer.
Although a few lenders promise that they will wire money directly into your bank account the
same business day, payment on the next business day is the norm. While same day loans
may look attractive to people in a financial bind, be aware that you might pay more in finance
charges for this privilege.
You may be wondering if you meet the minimum income requirements to get a cash
advance. This is not a concern for most full time workers. It is possible to get a loan with a
monthly income of $800 from some lenders, and if you earn at least $1000 monthly you will
meet the requirements for most payday lenders. Rarely will a lender check your credit, but
most lenders use a “payday lending only” tracking system, or some other database to verify
that the information that the customer has provided is correct.
Are you self employed or are you living on some form of benefit income like social security?
You can still get a payday loan, although you may have to do a little searching before you find a
lender who will be accommodating. You will be required to provide several months of bank
statements to verify your income.
Many online payday lenders boast that they offer no fax loans, saving the applicant the time
and trouble of having to find a fax machine. There are instances where some online lenders
will require that you fax certain documentation, especially if you have income that is difficult to
verify. Other companies offer truly faxless loans, with the entire process completed online;
this can save lot of time in getting your money.
What if you don't have a checking account? Many lenders can credit the money directly to your
savings account instead. When your payment is due, the money can be automatically
deducted from your account by ACH credit.
If you are unable to pay off your cash advance on your next payday, most online payday
lenders will renew or roll over your balance, sometimes for as many as four pay periods.
Avoid having to do this at all costs, because in rolling over your loan you will incur new finance
charges, a sure recipe for financial disaster.
With many people living from paycheck to paycheck, there will continue to be a growing need
for fast cash loans without credit requirements. Some lawmakers want to regulate payday
loans out of existence; however, these loans provide a needed service for many lower to
middle income people who live on a tight budget and aren't prepared to deal with an
unexpected financial emergency. If you find it difficult to keep up with your bills on a regular
basis, you may benefit from debt relief or credit counseling services. If you use payday loans
responsibly and take care when choosing a lender, they can be a lifesaver when you need
money fast.
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