Payday Loan Facts
Payday loans are considered as short-term loans that you can use to support you
during rough times especially concerning with monetary problems. There are a lot
who wanted to be in the know about payday loans. Before using payday loans, one
must know the attached costs and consequences to avoid losing much. In this topic,
you can have a quick overview on how payday loans works. Additional facts and info
about the correct usage and safe business deals will also be tackled.
Definition of Payday Loans
Payday loans are loans that are acquired if a person is in dire need of money. One
can have the opportunity to have a payday loan but only in a small amount. Payday
loans can help you through when you�re temporarily out of cash. The time frame a
payday loan lasts is not less then two weeks, at least. That is only applicable if
a person requested for just a modest amount of money like a couple of bucks.
To be able to request for a payday loan, the person typically writes a check
stating the amount to be borrowed which also includes a fee. Usually, the one who
is requesting leaves the check to the lender.
But what if you can�t repay it at the right time? You can keep it rolling for the
loan to be extended. You don�t have to repay it at once, although you may find it
surprising if your fees keep on accumulating.
Payday Loans Costs
Generally, payday loans are quite expensive. People who go into this pay annual
percentage rate or APR that amounts to an overwhelming percentage. Example, if you
have borrowed $200 to be paid for two weeks, you can pay a fee of $40. And if you
can�t pay the borrowed amount and the fee on time, you may find it very disturbing
to pay more increasingly. This kind of percentage can be quite alarming especially
for those who can only pay so much.
Pitfalls of Payday Loans
One of the main pitfalls of payday loans is that the company doesn�t really help
you solve your problem regarding financial problems. They only make the problem at
hand even worse because of the high percentage they are imposing on their clients.
Regardless of what your problem is, the loaning company doesn�t really care for as
long you pay the amount and fee adjoined with it. Because of the percentage fee
that is connected to the amount to be borrowed instead of helping you up, it just
pulls you down.
Although, in times of crisis, payday loans can be very helpful. People consider it
above every risk that is stated. Sometimes payday loans make sense most especially
if the person borrowing money needs it so much. This would only apply for short-
term payday loans. There is a total difference with long-term payday loans.
Trouble may arise if things are already out-of-hand. If the checks that you have
written for loaning establishments bounced, this will appear on your credibility.
Result? Fewer banks will be thrilled to work with you.
Payday Loan Alternatives
There are tons of alternatives in exchange of payday loans. These are some:
� Having your own emergency fund that will be kept in your savings account but this
one�s easier said than done.
� Open a credit for emergency purposes
� Get a part time job (but this will take some time and will not be very useful
when on-the-spot emergency arises)
� Consider peer lending service for a better and honest deal
