Overview of the Best Payday Loans
What Are Payday Loans?
Emergencies can strike anytime. It can be a worst case scenario if you do not have the cash immediately and pay day is a few weeks away. The payday loans which are offered by non-bank firms, in most cases, can be a great source of funding before the next payday. Simply put, these loans are meant for individuals who need cash to make ends meet before their next pay date.
Understanding How Payday Loans Work
Applying for the best payday loans is very simple. You are required to provide the following during the application process:
- Banking details, for example, bank account.
- Prove of identification, for instance, ID or Passport.
- Other details like collateral, proof of employment, proof of age etc
After submitting these documents, applicants are required to be patient for the loan to be processed and approved. Once that’s done, the applicants can receive the loan within few hours or a maximum of one business day.
There are countless companies or lenders offering these financial services. If the application is successful, the applicant is required to repay the loan amount, including interest charges depending on the repayment terms and schedules.
As you would expect, payday loans are usually less and the repayment schedule does not exceed 30 days. Usually, a direct lender would request collateral or postdated checks to give out these loans.
Are the Best Payday Loans Prohibitory Costly?
The reality is that short-term loans are cost-prohibitive. The interest rates are so high that some people even question lenders if they are really there to help in case of financial woes or they are just making a killing in this already lucrative niche.
Actually, payday loan lenders have the habit of making customers totally rely on them. Besides demanding high interest charges, the lenders have insanely quick repayment schedules. As a result, most borrowers find it hard to repay these loans and at the same time meet their monthly expenses. That’s why people who depend on these loans find themselves on a borrowing spree. The situation can worsen if the borrower have other loans to pay.
Payday loans do offer a quick fix when faced with unexpected expenses, but they’re not a long-term solution to the borrowers’ financial uncertainties. Thus, if you’ve to borrow these loans, it’s imperative to assess your financial situation first.
Taking out payday loans is very tempting. But taking out these loans to cover non-emergency expenses, for instance, going for a date or visiting museums, isn’t a wise decision.
The Best Payday Loans: Breaking the Borrowing Cycle
Using payday loans can be addictive. It is critical to repay these loans partially, if that is possible, to reduce the balance as well as stop the loans from rolling over. Also, it’s imperative to budget properly for rent, food and other basic utilities.
Almost all lenders allow borrowers to repay the loans in installments. This is good news to borrowers because they can lower the balance by paying off the loan with any amount they’ve. This is also important because debtors can pay off the loan earlier and avoid penalties such as late fees which are applicable if borrowers violent repayment terms.
Another important tip is to avoid unnecessary spending before settling the loans. As mentioned, late fees are applicable if the repayment deadline isn’t met. You can do some side jobs to get more money to repay the loans quickly.
What are the Alternatives to the Best Payday Loans?
As you’ve seen, payday loans are great if you’re in a desperate need of quick cash or cash advance, but it isn’t a wise idea to depend on them entirely. That being said, it’s vital to explore other financial sources before opting for these loans.
Nowadays, there are many banks as well as credit unions offering the same financial assistance at unbelievably low rates. In most cases, the rates are comparable to the credit card rates. Many credit unions and banks offer salary advance loans.
Of course, using credit card isn’t a good idea but it is much better compared to taking out payday loans because the repayment terms and schedules are flexible.
The Best Payday Loans and Installment Loans: What’s the Difference?
Installments loans, including payday loans are small-amount and high-cost loans. These loans usually carry high interest charges. There are reasons for this:
- Firstly, most of the borrowers are low-income earners.
- Secondly, the borrowers have little credit history or bad credit.
People who borrow these loans have difficulty in accessing cheaper loans, for instance, home-equity or credit cards loans offered by credit unions and banks. Below are the differences between payday and installment loans:
- Loan amount ranges from few hundred dollars to several thousands.
- Interest, principal including other charges like credit insurance premiums, fees and lots more are repaid depending on the agreed fixed monthly installments.
- Repayment schedule ranges from 6 months to few years.
- The APR or Annual percentage is about 25% and can exceed 100% in some cases.
- Effective APR is slightly higher than the one listed on the contract. This is because the lender purchases credit insurance, which in most cases, isn’t included in APR.
- The loan is secured. Borrowers are required to put down collateral in the form of personal property, jewelry, valuable items and many more.
- The loan is renewable but the credit insurance premiums, interest rates and fees can change.
- Loans range from few dollars to few thousands
- The repayment schedule is usually short, for example, a few days to a maximum of 30 days. The repayment is done immediately the borrower has been paid.
- The loan including interest rates are deducted automatically from the borrower’s bank account. The borrower can also repay the loans using post-dated check.
- The interest rates are very high.
- The loan is unsecured. The repayment ability of the borrower is evaluated using paychecks. One can secure the loan even if he or she has bad credit score.
- Additional fees are applicable if the borrower cannot pay back the loan. The borrower is given about 3 to 4 weeks to repay the whole amount.
Finding the Best Payday Loans: Brilliant Tips
Payday loans do not offer a permanent solution to precarious financial situations. The loan contract itself is loaded with snags that could result into outrageously high interest rates as well as penalty fees.
Your Needs Are Key
How much money do you need? What emergency expenses do you want to cover? You may be tempted to apply for bigger loans but the amount you need is less. This is something that you do not want to do because the interest rates can be unbearable. With that in mind, you should apply for loans that meet your needs. There are some people who are greedy and end up borrowing more money that become a headache to repay.
Compare the Various Options Available
There are various lenders offering these types of loans. You can get a better deal by comparing the various personal loans available in the market. It is worth noting that the lenders have different terms and policies. You should shop around to find ones that meet your specific tastes. You also need to proceed with caution, especially when choosing an online lender because some of them are questionable.
Read the Loan Contract Carefully
Only Choose a Reputable Lender
You should go for a lender that’s reputable and have real experience in the field. Choosing a lender who is listed by BBB is a great idea. A reputable lender guarantees top grade products and services as well as excellent customer care.
There are some lenders who attach higher fees on their loans. There are also horrible stories about payday scams. All these can be avoided by choosing a reputable and well-known lender. The reviews and testimonials are helpful, so you should read them to help you make an informed decision.
When applying for payday loans or title loans, proof of employment is required. In addition, the applicant is required to prove that he or she is 18 years and above. Genuine lenders cannot give you the loans if you cannot prove these. Moreover, you are required to add the correct details when applying online or offline.
The best payday loans can provide relief when one is faced with unexpected emergencies. These loans take shorter processing times and don’t require any collateral. What makes these loans unfavorable to some people is their high compounded interest as well as penalties.