In today’s economic climate securing a loan with less than perfect credit can be difficult, if not down right impossible. Those who do not qualify for traditional loans are left with very few options. Payday lending was designed with that borrower in mind. While this type of short term loan offers a much-needed service, it is important that the borrower know what they are getting into before they sign on the dotted line. Here are three tips to remember:
1) Payday loans weren’t designed with the long term borrower in mind. Typically they become due at the end of one pay cycle (between 7 and 14 days). They are not recommended as a solution for a long term financial problem. It is highly advised that you refrain from taking out a payday loan if you know you will not be able to pay it back within the timeframe specified in the loan agreement. Due to the high rate of interest, extending a payday loan multiple times can end up costing a borrower hundreds of dollars over and beyond the principle amount of the loan.
2) A traditional loan from a bank will have a much lower interest rate than a payday loan. If you qualify for a traditional loan, with or without a co-signer, you should consider that option first. Traditional loans generally offer lengthier paybacks as well as lower interest rates. Unfortunately not everyone will qualify for a standard loan or will have access to someone who would agree to co-sign.
3) A number of states have passed strict laws regulating the payday loan industry. You should always check with your state to determine whether there are laws in place to cap the amount of interest a company can charge, whether there are laws regulating how a loan may be offered (through a storefront or online), and if there are laws limiting the number of active loans a consumer may have at one time.
Be aware of your rights as a consumer. By doing research before signing on the bottom line, you will save yourself a good bit of time and trouble in the long run.
Thinking of a payday loan? Know your options. Installment bad credit loans. Follow my link for more tips on breaking the payday loan cycle.
Popularity: 1% [?]
