If you are going through difficult circumstances, payday loans may seem like a tempting option. But if you are not an experienced person, we suggest you consider this option after much thought. Since these loans have a very high interest rate, they should not be taken unless you have no other option. Below are 7 tips that can help you make an informed decision.
finance charges
The loan amount you will get is much lower than what is written on the check. The reason is that finance charges are deducted from the amount, so you will need to write a check plus these charges. Otherwise, you will have to pay a higher rate of finance charges. Most people get into even bigger trouble when they don’t pay the principal along with the interest. So make sure you know how much you’re getting and how much you’ll have to pay in the future.
recovery
If you don’t have enough funds in your account to repay the loan, you can try other options. For example, you can renew the loan amount or consider getting another payday loan. But keep in mind that this new loan will have its own finance charges and additional fees. And the additional charges are actually incurred due to the late payment of the loan amount.
State Regulations
In each state, the regulations are different for payday loans. Generally, the deadline is no more than 30 days. The problem is that lenders often issue loans with a longer term limit. In this case, you are at the mercy of the lender, which is a situation you may not be willing to put up with.
cash crunch
As stated above, the purpose of a payday loan is to deal with a temporary financial crisis, and we have to repay the loan as soon as we are out of financial trouble to avoid high interest and fees.
Therefore, it is not a good idea to be tempted by the “roll over” trend or you may have to pay a large sum in the end.
financial situation
Typically, these loans are for lower-income borrowers, since they cannot afford to borrow from other sources. Here, it is important to note that lenders do not usually take into account the financial situation of those who apply for the loan. Therefore, you should think more before going for this option.
automatic rollover
You should be aware that there are some loan sites that tend to transfer the loan amount automatically. And then there are sites that have some contractual agreements that state that you, the borrower, have no right to file bankruptcy or file a lawsuit against the lender.
Approval
A great feature of payday loans is that they are easy to obtain, which means that the approval process is much easier than other types of loans. Therefore, most borrowers find them quite tempting, but you should be careful and only go for this option if you have no other option.
You may say that going for a payday loan is a good idea to deal with a temporary financial crisis, but a hasty decision could land you in bigger trouble. If you’re not careful enough, you can end up in a vicious cycle of debt. Therefore, it is better to pay off the loan as soon as you get your hands on some extra money. Hopefully, keeping these tips in mind, you will make this decision.
