Payday loans are also referred to as cash advance loans, check advance loans, post-dated check loans, or deferred deposit loans. But they all fairly much mean the same thing.
In the case of online companies, you apply for a loan through the Internet. In case you; re approved, the money is wired over night into your checking account. The loan is usually for one to a month — until your next short term.
When the loan is due, the organization takes the amount you owe — plus a charge — out of your bank account. An individual can roll on the loan to the next payday, but you have to pay another fee.
But there are some facts you need to be aware about.
You won; t see these in the advertising for payday loans. Plus you may have to look the fine print on the company websites to find them. I call them the Five Hard Facts About Payday Loans.
Tough Truth #1:
A pay day loan will not solve all of your problems
Remember, it; t just a short-term loan. In addition to the quicker you can pay it back, the better. Don; t keep rolling over the loan and racking up the fees.
But you; re the. You can decide for yourself how you will; ll use the loan money and if you can pay it in return when you get your next paycheck.
Difficult Truth #2:
You can; t get an limitless amount of money
Wear; t anticipate to get countless numbers of dollars with an online payday loan. Most loans you get will be about hundred buck to $500 — enough to get most people through a crisis until the next payday.
Several payday loan companies promote that you can get $1, 000. True, but don; t be prepared to get that much the first time you are doing business with them. Once you be a regular customer, they may boost the amount you can borrow — as long as you; re making enough in your job.
Which bring us to …
Hard Truth #3:
Not everyone can get approved
Here; s the deal. They; re called short term loans because they; lso are for those who have work and have a regular salary. If you don; to have a job — or other income like Social Security — you; re not going to get one of these loans.
Also, your job has to pay you enough. If you earn about $1, 000 to $1, 200 per calendar month, you should be okay.
But these companies have other requirements you have to meet, and for good reason. They don; t know you, they; empieza never met you, so why are they relying you with their money? Because you prove you can pay the loan back.
So you; lmost all need to demonstrate them you have a job or other monthly income … you; ll need a bank account … you need to live somewhere and have a phone number … and you can; t be a complete deadbeat on the run from the legislation.
Sound reasonable? Sure.
Plus don; t worry too much about credit problems. They care more about your current ability to pay back a loan than with regards to your past troubles with credit. That; s a relief!
Hard Truth #4:
These loans put on; t come cheap
In general, you; ll pay up to $30 for every $100 you borrow.
Today, some pencil-pushers think that; s like paying an annual percentage rate of 390% or 780% or some such number. These people; ll say it; t outrageous when you compare it to get a mortgage at 6% a year, or paying 18% on your credit card charges.
Okay, but you; re not getting the loan for a year — only a few weeks at most. Therefore look at the price of taking out the money as a service charge. You alone can decide if it; s worth it to you.
Want an example?
Let; s say you have three bills due on Wednesday, however you put on; t get paid until Friday. If you pay your bills late, you get hit with late charges. If you write the checks anyway, and there; s not enough money in your account, the checks will bounce and you; ll have to pay fees for that.
Bounce one check and it might cost you $60. Bounce three checks and it; s $180!
Today compare that with paying, say, $50 or $60 to borrow $200 to cover your bills until payday. It makes far more sense to get the short-term loan now than to get hit with all those charges later.
What about overdraft protection? Your bank would wish to charge you extra for the service of covering you when you write checks for more than you have in your account.
And why not? Several overdraft plans charge fees as high as thirty-five dollars per overdraft! It; s a huge money-maker for banks. In fact, the biggest banks earn about $1 billion a year on overdraft fees.
What your bank doesn; to want one to know about payday loans is that they may be less costly than the financial institution; s overdraft protection plan. No ponder so many banks are raising a fuss about payday loans — it; s competition for them!
So before you think of using your bank; s overdraft protection plan, take a close look at the cost. You may find that a payday loan will save you some money.
Hard Truth #5:
Just about all payday advance companies are not the same.
It would be nice if you could just pick any payday loan company and know you; ll about the deal. Sadly, that; h not the case.
I’ve scoured the net looking for the best companies. I’ve looked at what kind of loans earning, what their fees are, what kind of service they offer, and whether they; re easy to use.
After reviewing dozens of these websites, I; m happy to report which you have some good choices out there. There are also some questionable companies, but we; ll leave those for the authorities to deal with.
If you do your homework, getting a payday loan may be just what you need, saving you profit the long run.
Wishing you best wishes in resolving your cash flow needs!