Payday loans – How Can They Possibly Be a Good Idea?

There are many different forms of credit available to those who need a loan. For those who have bad credit or no credit, a payday loan may be a useful financial tool. What are some issues that you need to consider before applying for a payday loan?

Native American Companies Could Scam You

If you take a payday loan from a Native American lender, they are not obligated to operate under United States usury laws. This means that you could be forced to pay an interest rate of 100 percent or more. Consumers also lack protection against predatory late fees that borrowers have when they work with lenders based in the United States.

States May Limit How Much You Can Borrow

Payday loans are great when you need $100 to pay an electric bill or $200 to pay your car note. However, most states will limit your ability to borrow to $1,000 at any given time. You may also be limited to the number of loans that you can take out at any given time. This means that you may not be able to use a payday loan to pay your bills even if you wanted to and could find a lender willing to make a loan.

No Credit Check Is Required

One good thing about a payday loan is that no credit check is required to get the loan. In some cases, you may be able to get a loan without showing proof of employment. While this could leave you in a sticky situation if you cannot repay the loan when it comes due, at least you give yourself more time to work things out if you are in a desperate financial situation.

Your Credit Score Could Improve

If your lender reports your positive payment history to the credit agencies, you can improve your credit score enough to qualify for a traditional loan in the future. The next time that you need a loan, you could apply for a low-interest credit card or a home equity loan instead of having to rely on a payday loan that could see you pay back $200 when you only borrowed $100.

A payday loan is not something that you should use on a whim. You have to know what you are getting into before you apply for the loan. While the money is easy to get, it can be costly to repay. If you can’t repay the loan on time, you could be trapped in a vicious debt cycle that takes years to get out of.

Cash advance loans charges in the USA – how much are they

Cash advance loans have been around for decades, but a lot of people aren’t familiar with what they are or how they work. For that matter, a lot of people aren’t even sure how much they costs. While a lot of attention has been given to these loans by the media for their high costs, the truth is that the actual costs of these loans vary a lot.
To understand why this is so, it is first necessary to understand how these loans work. Unlike a traditional loan that has an interest rate and other finance charges with payments broken up over several years, a payday loan usually has a single finance charge and it’s due in one lump sum (usually on payday). The cost of the finance charge is usually based on how much money is loaned. For example, some payday loan lenders will charge $25 for loans under $500, but $50 for loans between $500 and $1000.According to recent statistics, the average charge for a payday loan is $50. That figure simply averages all loans together, however, regardless of the amount of money borrowed, and doesn’t include all off the online payday loan lenders. That means there can be a lot of variation in what people actually pay for a short term loan.

Of course, a lot of people don’t pay the loans back at the first opportunity. For different reasons, many people don’t have the money to pay the loan back in full when it’s due. In these cases, borrowers have to take out another payday loan; they use the money from the second loan to pay back the first loan. When this happens, the borrower has to pay the fees again to take out the second loan.

“Rolling” cash advance  loans like this is what gets expensive. Since the fee from the last loan is often added to the balance when the next loan is taken out, the loan balance actually increases. The balance continues to grow as the borrower rolls the loan from week to week without ever making any payments on the debt. Doing this has meant that some people wind up paying thousands of dollars for payday loans.

In order to avoid this, it is strongly recommended that people who take out payday loans make it a priority to get them paid off as soon as possible. Ideally, pay them off as soon as they are due the first time.