Things You Should Know About Payday Loans

If you need emergency funds, you can get instant payday loans online. But before deciding to take out a payday loan, you must understand the pros and cons of this type of lending transaction. For instance, one major downside is that most payday loans have high-interest rates. Here are the things that could impact your decision whether or not to take advantage of these loans today!

Payday Loans Are Short-Term Loan

Payday loans are short-term loans and have strict repayment terms. The due date for repayment is usually within one or two weeks. The loan amount and interest rate vary depending on the company you apply to. Most companies require proof of employment (pay stubs) before approving your application, so make sure to keep them handy! If you don’t pay back the loan within two weeks, that’s when things get expensive.  This can quickly become very costly, so it’s best to avoid payday loans altogether. If you’re considering a payday loan, there are some things that you should know before signing any agreements or contracts with these companies.

Payday Loans Have Higher Interest Rates

paydayThe interest rates for payday loans can be as high as 400%+, which is why it’s essential to carefully consider whether or not a payday loan is right for you. Another important thing to keep in mind about payday loans is that your bank account may be at risk. If you default, the lender will attempt to withdraw payment from your account, leading to overdraft fees or even an emptied-out bank balance.

Payday loans are not the only way to access quick cash, though. Some alternatives may offer you better terms, like a personal loan or credit card advance. Plus, some banks and credit unions even offer small emergency loans (known as micro-loans) for under $500. You can quickly get approved with no security deposit required and you won’t have to jump through hoops like faxing or waiting on hold.

Payday Loans Offer an Automatic Payment Plan

A payday loan offers an easy-to-understand repayment plan. When you get a paycheck, the money lent to you will come directly out of your check and go toward paying off your loan. This is a good way for those low on cash to pay back their loan without thinking about it. You will also be reminded when it is time to make your payment.

If you cannot pay the loan back, certain things will happen that you should know about. You might have a hold put on any other loans or credit cards you have until the payday loan gets paid off in full. If this happens, then be sure that you do not miss any payments on other loans. You should also be aware that if you take out another payday loan, then the payment plan for your first one might change.

Payday loans are fast and easy to get, but they’re also expensive. If you have the money on hand or can borrow it from somewhere else at a lower interest rate, then payday loans might not be for you. Make sure that if you take out a loan with high fees like this one, you don’t use them more than once every six months. A good rule of thumb is never borrowing more than 10% of your monthly income in any given month for these types of loans because the cost will outweigh their benefits quickly enough. Remember- always research before taking out an online loan!