Finding yourself strapped for cash when payday is weeks away is a stress-inducing experience for far too many consumers. Whether an unexpected bill popped into your life or you simply over-extended your monthly budget, payday loans seem to be an easy option for a quick loan. Although these loans are readily available throughout the United States, the true questions remain: should you borrow from a payday loan service?
General Features of Payday Loans
Although specific features of these loans may vary from company-to-company, the general elements found in payday loans, or payday advances, are:
I. Small Amounts - The typical amount borrowed through this means is less than $500. While it may be possible to borrow more, with high fees and an expected short repayment period, the less you borrow the better.
II. Short Repayment Terms - These loans are designed to float you until your next payday. Therefore, you should only borrow what you know you'll be able to repay with your upcoming paycheck. Remember, you're responsible for repayment of the actual loan and all fees and interest payments.
III. Checking Account Access - In order to follow through with a payday loan, you must give the lender a post-dated check with the full repayment amount. This check is then deposited when you receive your next paycheck.
Interest Rates
The reason many consumer finance agencies, include the Federal Trade Commission, find these loans to be less-than desirable are the interest rates associated with such lending practices. It's not unheard of to have an interest amount up to $30 for every $100 you borrow. To put this in perspective, let's say you borrow $100 with a two-week repayment structure. The total interest rate is $15. Therefore, your APR on this small loan is 400-percent. When you compare this to the average credit card APR, which is an average of 12 to 30-percent, payday loans are extremely expensive.
Should I Take Out a Payday Loan?
The ultimate answer to this question is dependent on your current financial situation. The goal when taking out this type of loan is to pay off the balance in-full by the two-week due date. Failure to do so can result in exorbitant interest payments. Only continue with a payday loan if you're able to afford its repayment terms. There's nothing worse than obtaining a loan only to be unable to repay this loan. If you choose to obtain a payday loan, get all interest-rate details and other vital information in writing before agreeing. This may help prevent spending double what you originally asked to borrow. Visit this helpful website for more information on the topic.
General Features of Payday Loans
Although specific features of these loans may vary from company-to-company, the general elements found in payday loans, or payday advances, are:
I. Small Amounts - The typical amount borrowed through this means is less than $500. While it may be possible to borrow more, with high fees and an expected short repayment period, the less you borrow the better.
II. Short Repayment Terms - These loans are designed to float you until your next payday. Therefore, you should only borrow what you know you'll be able to repay with your upcoming paycheck. Remember, you're responsible for repayment of the actual loan and all fees and interest payments.
III. Checking Account Access - In order to follow through with a payday loan, you must give the lender a post-dated check with the full repayment amount. This check is then deposited when you receive your next paycheck.
Interest Rates
The reason many consumer finance agencies, include the Federal Trade Commission, find these loans to be less-than desirable are the interest rates associated with such lending practices. It's not unheard of to have an interest amount up to $30 for every $100 you borrow. To put this in perspective, let's say you borrow $100 with a two-week repayment structure. The total interest rate is $15. Therefore, your APR on this small loan is 400-percent. When you compare this to the average credit card APR, which is an average of 12 to 30-percent, payday loans are extremely expensive.
Should I Take Out a Payday Loan?
The ultimate answer to this question is dependent on your current financial situation. The goal when taking out this type of loan is to pay off the balance in-full by the two-week due date. Failure to do so can result in exorbitant interest payments. Only continue with a payday loan if you're able to afford its repayment terms. There's nothing worse than obtaining a loan only to be unable to repay this loan. If you choose to obtain a payday loan, get all interest-rate details and other vital information in writing before agreeing. This may help prevent spending double what you originally asked to borrow. Visit this helpful website for more information on the topic.