Payday Loans: What it is and How to Get it When You Need it

They say that the best time to borrow money is when you have a strategic plan for using it. For instance borrowing money for education or a student loan is an investment for your future. Taking out a business loan for a new equipment means increasing productivity and profit. But when it comes to Personal and Payday loans the best time to borrow is usually now. This is because the nature of such loans is to address financial emergencies quickly.

What is a  payday loan?

A payday loan is an unsecured short-term loan that are taken against your income or next pay check. These types of loans usually charge high interest rates because of the risk involved in a short-term and immediate credit without collateral involved. Loan amounts can range from as low as $100 to about $1000 depending on your paycheck. But according to the Consumer Financial Protection Bureau typical loans generally go for $500 or less. These loans are also generally paid in full around two to four weeks after it was approved.

How much are the fees and interest rates for payday loans?

As with any type of credit the fees and interest rates vary based on your credit provider as well as your credit score. If you’ve got a good credit score then you can get friendlier rates compared to those with bad credit. In general interest rates for payday loans is around 400% APR or Annual Percentage Rate at an average and can go as high as 780% APR. Given the high interest, payday loans are often regarded as a last option for those who need cash. But for those with credit problems who need cash fast it is often the only option. So even if the nature of your loan is urgent it is always best to scout for the best rates first and look for legit lenders before taking out a loan.

Who are eligible to avail of a payday loan?

In general anyone who is of legal age and has a paycheck are eligible to qualify for a payday loan.

Where can I apply for a pay day loan?

These types of loans are typically offered by small credit merchants with bric and mortar shops. But with today’s technology you can already find online lenders that carry them too. There are sites that help you find the best match for your needs and ability to pay.

How to manage your payday loan?

Since payday loans are small amounts that can be settled in a short period of time. Your best option is to settle it quickly. Otherwise you might find yourself into deeper debt as additional interest is accrued for unpaid amounts. Not just that it could also affect your credit score negatively especially if you let the unpaid interest snowball on you.

Personal loans and payday loans can be life savers if you use them properly. By that we mean using them for real needs and real emergencies. You don’t take out a payday loan on a whim because your favorite merchandise is on sale. Remember that these loans come with high interest rates so you should ask yourself first if it’s worth it.

No comments:

Post a Comment