Sometimes when things become a little tough, we do things without too much thought. Usually because we want to put the tough thing behind us and move on. This can result in jumping in on Payday Loans and regretting it later. Payday loans aren't all that evil as long as you know what you're getting into and you take some time thinking about actually doing it and how you'll later terminate the loan. To begin with, payday loans aren't always a good choice! Don't get tricked by the ads from the mall, radio, television or Internet. Even if you desperately need some cash until your payday, you should consider all the alternatives first. In my opinion, a brief definition for payday loans is expensive cash.
Cash advance payday loan is basically unsecured loan. It is provided without taking collateral from the borrower. Hence cash advance payday loan offer has no risks for the borrower. In the absence of collateral the lender however may incur risks. So lenders tend to charge higher interest rate on a payday loan. An advance payday loan however can be availed at comparatively lower interest rate. For this the borrower should take some steps.
To get an idea of how expensive payday loans are, you must know that this type of loan costs on average 470% APR (annual interest), while the APR a credit card is rarely higher than 60%. Let's assume you want to make a payday loan for the amount of $300, the loan fee is of $17.50 per $100, and the loan term is 14 days. Therefore, in order to redeem the check you have to pay $352.50 when the 14 day period is over. You can pay it by cash or you can allow the check to be deposited at the back. If you still don't have this money, you must pay the fee of $52.50 to renew the loan for another loan period. This means that borrowing $300 for a month will cost you $105. That's not cheap at all! By comparison, a $300 cash advance on an average credit card, repaid in one month, would not cost you more than $15.
The security risk involved in the online processing is another reason to avoid the payday loans. You have to intimate the bank account number, social security number and other such financial and personal details for the loan processing.
Because of the very high cost to borrow and the short repayment terms, the consumers sometimes tend to be trapped in repeat borrowing cycles. Reports show that almost 60% of all loans made every day are either loan renewals, or loans taken out by the same consumer immediately after paying off the last one. Payday loans with three-digit interest rate are prohibited in twelve states in the USA, where they are considered to be small loans or usury caps.
The impact of repeated payday loan applications to the credit score is considered to be a risk that may result far reaching consequences. Even though payday loans are said to be fast processing, you have to meet the necessary requirements such as a checking account, and direct checks. If your payday applications are rejected, it may badly affect the credit report.
It is advisable that if various payday loan providers are compared for their interest rates, it makes all the more easily to avail payday loan at cheaper rate. There are number of cash advance payday loan providers who have displayed their loan products online. The cost of the loan is reducible further if the loan is applied for to online lender. Online lender will process payday loan without taking a fee.
Cash advance payday loan is basically unsecured loan. It is provided without taking collateral from the borrower. Hence cash advance payday loan offer has no risks for the borrower. In the absence of collateral the lender however may incur risks. So lenders tend to charge higher interest rate on a payday loan. An advance payday loan however can be availed at comparatively lower interest rate. For this the borrower should take some steps.
To get an idea of how expensive payday loans are, you must know that this type of loan costs on average 470% APR (annual interest), while the APR a credit card is rarely higher than 60%. Let's assume you want to make a payday loan for the amount of $300, the loan fee is of $17.50 per $100, and the loan term is 14 days. Therefore, in order to redeem the check you have to pay $352.50 when the 14 day period is over. You can pay it by cash or you can allow the check to be deposited at the back. If you still don't have this money, you must pay the fee of $52.50 to renew the loan for another loan period. This means that borrowing $300 for a month will cost you $105. That's not cheap at all! By comparison, a $300 cash advance on an average credit card, repaid in one month, would not cost you more than $15.
The security risk involved in the online processing is another reason to avoid the payday loans. You have to intimate the bank account number, social security number and other such financial and personal details for the loan processing.
Because of the very high cost to borrow and the short repayment terms, the consumers sometimes tend to be trapped in repeat borrowing cycles. Reports show that almost 60% of all loans made every day are either loan renewals, or loans taken out by the same consumer immediately after paying off the last one. Payday loans with three-digit interest rate are prohibited in twelve states in the USA, where they are considered to be small loans or usury caps.
The impact of repeated payday loan applications to the credit score is considered to be a risk that may result far reaching consequences. Even though payday loans are said to be fast processing, you have to meet the necessary requirements such as a checking account, and direct checks. If your payday applications are rejected, it may badly affect the credit report.
It is advisable that if various payday loan providers are compared for their interest rates, it makes all the more easily to avail payday loan at cheaper rate. There are number of cash advance payday loan providers who have displayed their loan products online. The cost of the loan is reducible further if the loan is applied for to online lender. Online lender will process payday loan without taking a fee.
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