In order to apply for a payday loan, applicants ought to know how they work and get used with a variety of concepts that will let them know weather a payday loan is convenient or not. This kind of loans came to solve a problem that before their appearance was almost impossible to work out: Getting finance in an emergency without enough time to apply for a personal loan. We are talking about a small amount of money (up to $2000) but needed within 24 hours.
As one can know by intuition, 24 hours is not enough time to process all the information regular lenders need in order to approve a personal loan. Thus, before the arrival of payday loans customers had no other choice but to resort to family or non traditional financial solutions usually illegal and extremely expensive.
How they work
Regular loans have lots of requirements. In fact, banks and traditional lenders rarely grant loans for people with a bad credit score or history and they usually avoid lending to those who can't offer any collateral. Payday Loans, on the other hand, have almost no requirements and are especially designed for those who lack collateral and have bad credit or no credit at all.
The only requirements an applicant will have to meet are: showing proof of a steady job and owning a bank account. This is due to the fact that Payday loans have to be paid off by the time the applicant's next paycheck arrives and the loan amount will be transferred to the borrower's bank account. Anyone who can meet these two requirements will get a payday loan without hassles.
It is possible to cancel the loan before de due date, this fact will be recorded and will improve your ability to get finance, so if you can do so, don't think twice. Otherwise, the loan amount plus fees and interest will be subtracted from your bank account when the loan is due.
Interest rate explained
Payday loan carry high interest rate, in fact, the interest rate is turned in this case into a flat and single fee, usually calculated every $100. Payday loan fees range between $10 and $40 every $100. It varies if the fee is calculated weekly, biweekly or monthly, so it's a smart thing to watch the small print closely as what you may think is a good deal can turn out to be a rip off.
If you just need a small amount there is nothing to worry about. However if you will be borrowing a larger amount be specially careful with the interest rate as you may end up paying up to 30% interest on a very short term loan. In order to get a good deal out of a payday loan you should only borrow small amounts for short periods of time, this way not only you will avoid overpaying but you'll also improve your credit history.
There are many online payday loan lenders that won't pull your credit report nor require documentation to be sent via fax. Online lenders provide the best service and usually have the lowest interest rates. There are also sites that provide access to many lenders so you can compare what each of them has to offer.
Saturday, October 20, 2007
A How To Get Out Of Debt Faster Using Zero APR Credit Cards
I know it sounds crazy but it's possible to get out of debt by using 0 APR credit cards. The zero APR credit card is a special no interest rate offer that comes from different financial institutions looking for new business. These cards usually offer an extremely low or no interest rate charge during an introductory period. During this introductory time, you aren't charged any interest on the balance owed.
The zero rate cards also allow for transferring your old balance from a high interest rate card to your new lower rate card. This means that you can take your $5,000 dollar credit card balance on your old card that was charging 18 to 24% interest and move it over to the new card at the introductory rate.
Moving a high balance credit card to one of these zero APR intro rate cards can save as much as $100 a month. Now consider that if you take that hundred dollars a month and pay down the total amount owed, even if the temporary rate was six months, you saved $600 dollars.
The good thing is that all you had to do pay down that extra $600, was the continued to make the exact same monthly payment but on the new credit card. The extra money instead of going to interest simply went to pay down the total principal owed.
Another wise financial decision you can make is that once you transfer your credit card balance to the zero APR credit card, close your original high interest rate card account. Having too many credit cards or credit lines available can actually lower your total overall credit score. Closing the high interest account makes sense because it keeps you from continuing to use that card.
One of the worst things anyone can do when using zero APR credit cards as a financial tool is to keep the high interest rate card active in continuing to use it. This is a common mistake of many young adults who instead of using careful budgeting strategies make the assumption that they can handle credit and end up with yet another increase in credit card debt.
Credit card interest rates are getting absolutely ridiculous. To make matters worse, the financial companies behind these cards are charging exorbitant fees whenever they can. This means that if a payment is somehow late, not only do they charge a huge late fee but can also raise your interest-rate. It's in everyone's best interest to get out of credit card debt as quickly as possible, and using zero APR credit card offers can be a good strategy.
The zero rate cards also allow for transferring your old balance from a high interest rate card to your new lower rate card. This means that you can take your $5,000 dollar credit card balance on your old card that was charging 18 to 24% interest and move it over to the new card at the introductory rate.
Moving a high balance credit card to one of these zero APR intro rate cards can save as much as $100 a month. Now consider that if you take that hundred dollars a month and pay down the total amount owed, even if the temporary rate was six months, you saved $600 dollars.
The good thing is that all you had to do pay down that extra $600, was the continued to make the exact same monthly payment but on the new credit card. The extra money instead of going to interest simply went to pay down the total principal owed.
Another wise financial decision you can make is that once you transfer your credit card balance to the zero APR credit card, close your original high interest rate card account. Having too many credit cards or credit lines available can actually lower your total overall credit score. Closing the high interest account makes sense because it keeps you from continuing to use that card.
One of the worst things anyone can do when using zero APR credit cards as a financial tool is to keep the high interest rate card active in continuing to use it. This is a common mistake of many young adults who instead of using careful budgeting strategies make the assumption that they can handle credit and end up with yet another increase in credit card debt.
Credit card interest rates are getting absolutely ridiculous. To make matters worse, the financial companies behind these cards are charging exorbitant fees whenever they can. This means that if a payment is somehow late, not only do they charge a huge late fee but can also raise your interest-rate. It's in everyone's best interest to get out of credit card debt as quickly as possible, and using zero APR credit card offers can be a good strategy.
Unsecured Personal Payday Loans Are Not a Long-Term Solution
Unsecured personal loans are sometimes called fast cash or payday loans. The good news is that anyone with a steady paycheck, even those earning minimum wage, can qualify for these types of cash advances. Pay day lending however, can be a very short and painful way out of a temporary situation.
The bad news with unsecured personal loans were payday loans is that you almost never can seem to catch up. A payday advance is extremely expensive! How expensive, you might ask? Some companies charge as much as 25% or more, every couple of weeks. This comes out to 650% for a year. But that's not the worst of it...
Think about this:
A payday cash advance of $100 for two weeks, would cost $125. So if you pay the loan back in two weeks. You pay them the hundred dollars plus 25 dollars in interest.
So you would think that in four weeks, it would cost an it would cost you $150, right?
WRONG!
The way payday cash advance loans work is that they loan you $100, in two weeks it would cost you $125. But if you couldn't pay the hundred and $25 in interest, they would simply give you a new loan to pay off the old one.
So for the next two weeks, you would have $125 loan and owe $31.25 in interest.
So a 100 loan, for one month would actually cost $156.25. Here's a quick look at it just three months for a hundred all alone could cost.
Weeks w/Loan Amount Owed
$100.00
2 weeks $125.00
4 weeks $156.25
6 weeks $195.31
8 weeks $244.14
10 weeks $305.18
12 weeks $381.47
So after four weeks. The typical payday loan of 100 dollars would cost $156.25. After two months it would cost $244.14. And after just three short months. A cash advance of only $100, would cost you $381.47.
This figures out to 650% interest over one year! That's not the annual percentage rate or APR, but just flat interest-rate.
The last problem with personal payday type loans is that most want access to your checking or savings account. They say this is to make it easier for you but it also allows them full access to your bank accounts. If there's an error, you fight them about it all the while they take your money.
If however, you are in need of a fast cash loan and are able to pay it off on time, there are several programs that offer your first loan free of interest. I you need a one time short term unsecured personal loan, maybe one of these no interest one-use options are for you.
Remember though, the payday loan businesses will continue to contact you trying to get you to get back in debt. You must be able to ignore these types of marketing plans that would only end up hurting you long-term financial future. Just if you decide to use a payday loan, just make certain you have a plan to pay it back on time.
The bad news with unsecured personal loans were payday loans is that you almost never can seem to catch up. A payday advance is extremely expensive! How expensive, you might ask? Some companies charge as much as 25% or more, every couple of weeks. This comes out to 650% for a year. But that's not the worst of it...
Think about this:
A payday cash advance of $100 for two weeks, would cost $125. So if you pay the loan back in two weeks. You pay them the hundred dollars plus 25 dollars in interest.
So you would think that in four weeks, it would cost an it would cost you $150, right?
WRONG!
The way payday cash advance loans work is that they loan you $100, in two weeks it would cost you $125. But if you couldn't pay the hundred and $25 in interest, they would simply give you a new loan to pay off the old one.
So for the next two weeks, you would have $125 loan and owe $31.25 in interest.
So a 100 loan, for one month would actually cost $156.25. Here's a quick look at it just three months for a hundred all alone could cost.
Weeks w/Loan Amount Owed
$100.00
2 weeks $125.00
4 weeks $156.25
6 weeks $195.31
8 weeks $244.14
10 weeks $305.18
12 weeks $381.47
So after four weeks. The typical payday loan of 100 dollars would cost $156.25. After two months it would cost $244.14. And after just three short months. A cash advance of only $100, would cost you $381.47.
This figures out to 650% interest over one year! That's not the annual percentage rate or APR, but just flat interest-rate.
The last problem with personal payday type loans is that most want access to your checking or savings account. They say this is to make it easier for you but it also allows them full access to your bank accounts. If there's an error, you fight them about it all the while they take your money.
If however, you are in need of a fast cash loan and are able to pay it off on time, there are several programs that offer your first loan free of interest. I you need a one time short term unsecured personal loan, maybe one of these no interest one-use options are for you.
Remember though, the payday loan businesses will continue to contact you trying to get you to get back in debt. You must be able to ignore these types of marketing plans that would only end up hurting you long-term financial future. Just if you decide to use a payday loan, just make certain you have a plan to pay it back on time.
Thursday, October 18, 2007
Payday Loan Guide
Cash advance payday loans are just loans to help your finances in between your paydays. A lot of people who apply for a quick payday loan are responding to an emergency financial situation. The downside is that the interest rates for a cash advance payday loan are higher than for conventional loans. The no fax payday loans are the most favored among the general public and these are probably the best payday loans.
The reasons for a fax less payday loan are plain - it saves a bit of time on application, money for the borrower, and tempts more people to apply. Online cash advance payday loans are the number one option that one can think of when an emergency strikes. Some other alternatives to the payday loan are personal loans, credit cards, and debt consolidation. In point of fact, requirements for a payday loan are small; you just need to hold a bank account and a job. It is a fact that the number of people applying for a payday loan are increasing by the day.
If you need quick money, an online payday loan could be the answer. Whether it is a medical emergency, garage bill, or merely bad financial planning, one way to get help is to obtain a quick payday loan. Obtaining a quick cash loan, cash advance or payday loan has never been so easy, thanks to the powers of the internet. I am pretty sure it is compulsory for quick payday loan applicants to have been in their current employment for a minimum period of 6 months. Cash advance has become a useful alternative when we need quick cash. The online payday loan takes only a minimal time to complete and usually doesn't need any other documentation.
Occasionally in between paychecks we find ourselves running out of cash, and need to find an easy cash payday loan. Luckily it is simple to apply online for fast cash payday loans. Payday loans are easy to obtain and because of the way that they are set up, are easy to pay back.
To submit an online payday loan application the applicant must be over 18 years old, this is always required. One thing you might want to find out is if you are being charged extra for a no credit check with any online payday loan you take out. You can get an online payday loan without setting foot out of your house.
The reasons for a fax less payday loan are plain - it saves a bit of time on application, money for the borrower, and tempts more people to apply. Online cash advance payday loans are the number one option that one can think of when an emergency strikes. Some other alternatives to the payday loan are personal loans, credit cards, and debt consolidation. In point of fact, requirements for a payday loan are small; you just need to hold a bank account and a job. It is a fact that the number of people applying for a payday loan are increasing by the day.
If you need quick money, an online payday loan could be the answer. Whether it is a medical emergency, garage bill, or merely bad financial planning, one way to get help is to obtain a quick payday loan. Obtaining a quick cash loan, cash advance or payday loan has never been so easy, thanks to the powers of the internet. I am pretty sure it is compulsory for quick payday loan applicants to have been in their current employment for a minimum period of 6 months. Cash advance has become a useful alternative when we need quick cash. The online payday loan takes only a minimal time to complete and usually doesn't need any other documentation.
Occasionally in between paychecks we find ourselves running out of cash, and need to find an easy cash payday loan. Luckily it is simple to apply online for fast cash payday loans. Payday loans are easy to obtain and because of the way that they are set up, are easy to pay back.
To submit an online payday loan application the applicant must be over 18 years old, this is always required. One thing you might want to find out is if you are being charged extra for a no credit check with any online payday loan you take out. You can get an online payday loan without setting foot out of your house.
Wednesday, October 17, 2007
How-To Get an Online Payday Loan Even If You Have Bad Credit!
Many people face the unfortunate fact that they suffer from bad credit or no credit. The hardest thing for a person with bad credit or no credit to do is to get ahead and start rebuilding their credit rating.
There are times when most of us face financial emergencies and have a need for a loan to get us through the crisis. However, if the consumer has bad credit, their options for finding a way through the crisis are few.
How Do You Know If You Have Bad Credit?
Most of us already know if we have a good or bad credit rating based on our history of paying our bills and loan payments. If we have paid them in full and on time, we most likely have a positive credit rating. If, however, we have struggled to make payments, or been late on payments, there would be reason to believe that our credit rating would be less than perfect.
In 2003, the federal government passed a law that allows consumers to check their credit rating for free, once a year. Prior to the passage of this law, it was quite difficult for a consumer to view their credit report and many people found this to be unfair because lenders are making decisions about whether or not to give them a loan based on this report.
There were a handful of websites and businesses that began offering ways for consumers to view their credit report for a fee. It simply did not make sense that a consumer had to pay to view their credit report considering a credit report can have such a major impact on a person's life.
The Government Has Mandated Free Credit Reports For Everyone... If You Know Where To Look...
The government's official website for getting your annual free credit report is AnnualCreditReport.com. You can, and should, view your credit report to find any discrepancies in your credit history. This will help ensure that your credit report is accurate and that you have the appropriate rating. If you find errors on your credit report you can contact the reporting company and correct those errors. Taking a look at your credit report will also let you know if you have been a victim of identity theft and if someone has been taking out loans or credit cards in your name.
Many younger people have simply not yet established a credit rating because they have had very few, if any, loans. It is difficult to prove to a lender that you are a person that repays their bills when no one will give you any bills to repay.
Having a bad credit rating or no credit rating can leave you in a real bind if you find yourself with unexpected expenses. The reality is that unexpected expenses occur from time to time, no matter how hard we try and stay on top of a budget.
The First Step On The Road To Recovery
One option that you can turn to if you run into one of these unexpected expenses, and your credit is less than perfect, is getting an instant online payday loan. When you get an online payday loan or no teletrack payday loan, lenders generally do not check your credit rating to see if you have experienced financial difficulty in the past. They are not as concerned with your credit rating as a traditional lender would be, because you are generally required to write a post-dated check to them. The expectation is that the online cash advance payday loan company will cash the check on your next payday. This is how they get the security or collateral that assures you will repay the internet payday loan or no teletrack payday loan.
All that is generally required with a no teletrack payday loan or an instant online payday loan is that you are employed, have a checking account, and that you are at least eighteen years old. If you can meet these minimum requirements, you can easily be approved for a short-term internet payday loan or no teletrack payday loan.
Additionally, many online payday cash advance loan companies will allow you to get another no teletrack payday loan or instant online payday loan from them in the future, for a larger amount, if you repay a couple of loans on time and in full with them. In essence, you are establishing credit with the internet payday loan company.
Instant online payday loans or no teletrack payday loans are generally seen as a last resort and should only be used in an emergency situation. Online cash advance payday loans are not a way to fix long-term financial problems; they should generally be used to simply get you by until your next paycheck arrives. The lenders will charge you a fee for taking out the instant online payday loan, but this fee is a small price to pay if you have to have money now and you have no other means of getting your hands on some quick cash.
There are times when most of us face financial emergencies and have a need for a loan to get us through the crisis. However, if the consumer has bad credit, their options for finding a way through the crisis are few.
How Do You Know If You Have Bad Credit?
Most of us already know if we have a good or bad credit rating based on our history of paying our bills and loan payments. If we have paid them in full and on time, we most likely have a positive credit rating. If, however, we have struggled to make payments, or been late on payments, there would be reason to believe that our credit rating would be less than perfect.
In 2003, the federal government passed a law that allows consumers to check their credit rating for free, once a year. Prior to the passage of this law, it was quite difficult for a consumer to view their credit report and many people found this to be unfair because lenders are making decisions about whether or not to give them a loan based on this report.
There were a handful of websites and businesses that began offering ways for consumers to view their credit report for a fee. It simply did not make sense that a consumer had to pay to view their credit report considering a credit report can have such a major impact on a person's life.
The Government Has Mandated Free Credit Reports For Everyone... If You Know Where To Look...
The government's official website for getting your annual free credit report is AnnualCreditReport.com. You can, and should, view your credit report to find any discrepancies in your credit history. This will help ensure that your credit report is accurate and that you have the appropriate rating. If you find errors on your credit report you can contact the reporting company and correct those errors. Taking a look at your credit report will also let you know if you have been a victim of identity theft and if someone has been taking out loans or credit cards in your name.
Many younger people have simply not yet established a credit rating because they have had very few, if any, loans. It is difficult to prove to a lender that you are a person that repays their bills when no one will give you any bills to repay.
Having a bad credit rating or no credit rating can leave you in a real bind if you find yourself with unexpected expenses. The reality is that unexpected expenses occur from time to time, no matter how hard we try and stay on top of a budget.
The First Step On The Road To Recovery
One option that you can turn to if you run into one of these unexpected expenses, and your credit is less than perfect, is getting an instant online payday loan. When you get an online payday loan or no teletrack payday loan, lenders generally do not check your credit rating to see if you have experienced financial difficulty in the past. They are not as concerned with your credit rating as a traditional lender would be, because you are generally required to write a post-dated check to them. The expectation is that the online cash advance payday loan company will cash the check on your next payday. This is how they get the security or collateral that assures you will repay the internet payday loan or no teletrack payday loan.
All that is generally required with a no teletrack payday loan or an instant online payday loan is that you are employed, have a checking account, and that you are at least eighteen years old. If you can meet these minimum requirements, you can easily be approved for a short-term internet payday loan or no teletrack payday loan.
Additionally, many online payday cash advance loan companies will allow you to get another no teletrack payday loan or instant online payday loan from them in the future, for a larger amount, if you repay a couple of loans on time and in full with them. In essence, you are establishing credit with the internet payday loan company.
Instant online payday loans or no teletrack payday loans are generally seen as a last resort and should only be used in an emergency situation. Online cash advance payday loans are not a way to fix long-term financial problems; they should generally be used to simply get you by until your next paycheck arrives. The lenders will charge you a fee for taking out the instant online payday loan, but this fee is a small price to pay if you have to have money now and you have no other means of getting your hands on some quick cash.
Monday, October 15, 2007
Consumer Advocacy Groups and Congress Consider: the Payday Advance Loan Product
Many of us have endured a financial hardship at one time or another; unfortunately, finding a way to dig your way out of debt can pose to be quite a challenge for people of all income levels.
In recent years, low cost payday loans have become an increasingly popular method to remedy immediate financial needs. However, the lack of government oversight on lenders who offer these short-term loans has caused a significant amount of concern for many consumer advocacy groups. In recent years, many politicians and consumer groups have taken steps to ensure that the practices of payday advance companies do not take an unfair advantage of those who are most in need.
A low cost payday loan, in the hands of a responsible individual, can be an excellent way to solve short-term financial problems. The borrower fills out a brief application; the lender then reviews this information to decide if the borrower will meet the terms of the payday advance. The qualifications for the average borrower are quite low since most lenders do not actually perform a credit check. The consumer receives their funds on the same day and is expected to repay the low cost payday loan when they receive their next paycheck; this is generally within one to two weeks.
Best When Used By Responsible Borrowers
This situation sounds rather harmless. Actually, it is an ideal situation for the responsible borrower. Unfortunately, there are a number of borrowers who do not consider the complications and penalties they can incur if they are not levelheaded about the terms of their payday advance.
There is no application fee for a low cost payday loan, thus lenders charge a transactional fee to keep the loan lucrative. For a loan of $100, the average borrower can expect to pay a fee, which roughly amounts to $18. That amount is negligible if you consider that the same borrower might pay $25-$35 if they are late in paying one of their bills or if they bounce a check.
The fees for a payday advance are extremely reasonable, when you weigh them against late payment fees and the dings to your credit rating that late payments can produce. Payday advance fees are easily manageable, as long as the borrower repays their loan on time. Those who prolong the repayment of their low cost payday loan, however, can accrue many extra fees resulting in significant financial penalties. Since the fee for a payday loan is calculated on a really short time window of generally one or two weeks, the loan fees will continue to increase exponentially until the payday advance has been repaid in full. This means that the initial predicted fee can double, triple, or possibly quadruple in very short order. If the borrower is too lax about repaying their loan, they could end up in deeper financial strains than they were in when they took the original loan.
When you consider that some borrowers are already experiencing serious monetary difficulties, logic dictates that this selfsame borrower might also fall behind on the repayment of their payday advance loan. In fact, there are some who use new low cost payday loans to repay earlier loans. Others have come to depend upon payday advance loans as a way to manage their monthly bills. Studies have shown that the average borrower uses this service eight to twelve times per year. This approach to payday advance loans (also known as cash advance loans, check cash advance loans, faxless loans, same day loans, no teletrack loans, etc.) is not financially prudent. In the hands of a responsible individual, a payday advance is considered a last resort method to resolve an immediate financial need.
Consumer Advocate Groups Have Approached Congress For Relief
Some states have developed new laws to protect consumers from the complications that can arise from the careless use of this type of service. It is important to understand that low cost payday loans are completely legal, but some of us need additional aid to prevent us from making ill-considered financial decisions. Until recently, there were few national restrictions upon this kind of service. In May of 2006, the House of Representatives proposed an amendment to the Truth in Lending Act to enhance state laws revolving around payday advance loans.
There are many reforms that the House would like to see in regards to payday advance loans. A number of these changes revolve around the contract which the borrower signs. According to the current bill making the rounds in Congress, the contract would highlight the maturity date for the payday advance loan, the fees associated with the loan stated both as an APR and as a projected dollar amount, and the penalties the borrower would incur if they should repay the loan after the agreed upon date. They would also like the lender to perform some sort of a credit check to ensure that they are lending this money to someone who will repay their debt in a timely manner. Additional changes that congress members would like to see include a cap upon the APR and a limit upon the number of loans a person can have within a specified amount of time.
These alterations to the average low cost payday loan agreement would benefit the consumer as well as the lender. If both parties are clear about their terms, it should ensure that the transaction would run smoothly. However, until this bill is finalized, it is important that consumers approach payday advance loans in a self-responsible manner. This means they should use the service sparingly, repay their debt by the loan's maturity date, and carefully review their contract with the lender before signing.
In recent years, low cost payday loans have become an increasingly popular method to remedy immediate financial needs. However, the lack of government oversight on lenders who offer these short-term loans has caused a significant amount of concern for many consumer advocacy groups. In recent years, many politicians and consumer groups have taken steps to ensure that the practices of payday advance companies do not take an unfair advantage of those who are most in need.
A low cost payday loan, in the hands of a responsible individual, can be an excellent way to solve short-term financial problems. The borrower fills out a brief application; the lender then reviews this information to decide if the borrower will meet the terms of the payday advance. The qualifications for the average borrower are quite low since most lenders do not actually perform a credit check. The consumer receives their funds on the same day and is expected to repay the low cost payday loan when they receive their next paycheck; this is generally within one to two weeks.
Best When Used By Responsible Borrowers
This situation sounds rather harmless. Actually, it is an ideal situation for the responsible borrower. Unfortunately, there are a number of borrowers who do not consider the complications and penalties they can incur if they are not levelheaded about the terms of their payday advance.
There is no application fee for a low cost payday loan, thus lenders charge a transactional fee to keep the loan lucrative. For a loan of $100, the average borrower can expect to pay a fee, which roughly amounts to $18. That amount is negligible if you consider that the same borrower might pay $25-$35 if they are late in paying one of their bills or if they bounce a check.
The fees for a payday advance are extremely reasonable, when you weigh them against late payment fees and the dings to your credit rating that late payments can produce. Payday advance fees are easily manageable, as long as the borrower repays their loan on time. Those who prolong the repayment of their low cost payday loan, however, can accrue many extra fees resulting in significant financial penalties. Since the fee for a payday loan is calculated on a really short time window of generally one or two weeks, the loan fees will continue to increase exponentially until the payday advance has been repaid in full. This means that the initial predicted fee can double, triple, or possibly quadruple in very short order. If the borrower is too lax about repaying their loan, they could end up in deeper financial strains than they were in when they took the original loan.
When you consider that some borrowers are already experiencing serious monetary difficulties, logic dictates that this selfsame borrower might also fall behind on the repayment of their payday advance loan. In fact, there are some who use new low cost payday loans to repay earlier loans. Others have come to depend upon payday advance loans as a way to manage their monthly bills. Studies have shown that the average borrower uses this service eight to twelve times per year. This approach to payday advance loans (also known as cash advance loans, check cash advance loans, faxless loans, same day loans, no teletrack loans, etc.) is not financially prudent. In the hands of a responsible individual, a payday advance is considered a last resort method to resolve an immediate financial need.
Consumer Advocate Groups Have Approached Congress For Relief
Some states have developed new laws to protect consumers from the complications that can arise from the careless use of this type of service. It is important to understand that low cost payday loans are completely legal, but some of us need additional aid to prevent us from making ill-considered financial decisions. Until recently, there were few national restrictions upon this kind of service. In May of 2006, the House of Representatives proposed an amendment to the Truth in Lending Act to enhance state laws revolving around payday advance loans.
There are many reforms that the House would like to see in regards to payday advance loans. A number of these changes revolve around the contract which the borrower signs. According to the current bill making the rounds in Congress, the contract would highlight the maturity date for the payday advance loan, the fees associated with the loan stated both as an APR and as a projected dollar amount, and the penalties the borrower would incur if they should repay the loan after the agreed upon date. They would also like the lender to perform some sort of a credit check to ensure that they are lending this money to someone who will repay their debt in a timely manner. Additional changes that congress members would like to see include a cap upon the APR and a limit upon the number of loans a person can have within a specified amount of time.
These alterations to the average low cost payday loan agreement would benefit the consumer as well as the lender. If both parties are clear about their terms, it should ensure that the transaction would run smoothly. However, until this bill is finalized, it is important that consumers approach payday advance loans in a self-responsible manner. This means they should use the service sparingly, repay their debt by the loan's maturity date, and carefully review their contract with the lender before signing.
Thursday, October 11, 2007
Deciding Whether A Payday Loan Is Right For You
Payday loans are often touted as a quick fix for a bad financial situation, letting you bridge the gap between running out of money and your next wage or salary coming in. The basic idea is that you can borrow a small amount of a few hundred dollars for a short period of a week or two, and repay the debt next time you get paid.
This sort of service can indeed be very useful if you've run out of cash for living expenses, or if you're faced with an unexpected bill or expense that you simply can't cover when you need to, but are payday loans always the good choice they're presented as?
First, we'll take a look at the undeniable advantages of these loans, before looking at the disadvantages, and possible alternatives you may be able to use if you decide a payday loan isn't right for you.
The lending criteria for payday loans are very generous indeed, and almost anyone who's employed and has a suitable bank account will likely be approved. This means that even people with terrible credit ratings should be able to get a payday loan, despite being rejected for nearly any other form of finance.
They are also easy to arrange, and you can often get the money in your account in a matter of days. Some lenders can even arrange an overnight transfer of the loan straight into your account the very next day, which is obviously very useful when you need cash in a hurry.
Finally, once you've been approved for your first loan, it's usually a very simple matter to 'refresh' your loan again if you find you need to make use of the facility if funds are again short in the future.
There are, however, two major downsides to payday loans which you rarely see mentioned in the advertisements and web sites promoting them. Firstly, they're very expensive compared to other forms of credit. Because the term of the loan is so short, a fee of 20% of the amount you borrow - which is about standard - will work out to be an eye-wateringly high APR.
The second problem is closely related: because they're so expensive, you can easily be left short of money the next month once you've cleared the loan and paid the fee. In this scenario, it's just too easy to refresh your loan again to cover the shortfall, resulting in more fees, and a never ending cycle of borrowing.
So, if you decide that a payday loan isn't a good choice for you, what alternatives do you have? The first one is making use of a credit card, if you have one. While credit cards are usually also pretty expensive forms of finance, they do allow you to spread the debt over a number of months rather than needing to be repaid straight away along with a fee.
Many bank accounts now offer an overdraft facility, which can also be used to cover a short term lack of money. The interest rate on an agreed overdraft is likely to be better than that of a credit card, but your bank may not approve your application. Beware of going ahead and overdrawing without your bank's agreement, as the charges they will levy in this case will be very expensive.
If neither of these options is available to you, and you have no other way of getting hold of money such as borrowing off family, then a payday loan may be the best option. Just ensure that you use it properly, and heed the warning sign it's giving you about the longer term state of your finances.
This sort of service can indeed be very useful if you've run out of cash for living expenses, or if you're faced with an unexpected bill or expense that you simply can't cover when you need to, but are payday loans always the good choice they're presented as?
First, we'll take a look at the undeniable advantages of these loans, before looking at the disadvantages, and possible alternatives you may be able to use if you decide a payday loan isn't right for you.
The lending criteria for payday loans are very generous indeed, and almost anyone who's employed and has a suitable bank account will likely be approved. This means that even people with terrible credit ratings should be able to get a payday loan, despite being rejected for nearly any other form of finance.
They are also easy to arrange, and you can often get the money in your account in a matter of days. Some lenders can even arrange an overnight transfer of the loan straight into your account the very next day, which is obviously very useful when you need cash in a hurry.
Finally, once you've been approved for your first loan, it's usually a very simple matter to 'refresh' your loan again if you find you need to make use of the facility if funds are again short in the future.
There are, however, two major downsides to payday loans which you rarely see mentioned in the advertisements and web sites promoting them. Firstly, they're very expensive compared to other forms of credit. Because the term of the loan is so short, a fee of 20% of the amount you borrow - which is about standard - will work out to be an eye-wateringly high APR.
The second problem is closely related: because they're so expensive, you can easily be left short of money the next month once you've cleared the loan and paid the fee. In this scenario, it's just too easy to refresh your loan again to cover the shortfall, resulting in more fees, and a never ending cycle of borrowing.
So, if you decide that a payday loan isn't a good choice for you, what alternatives do you have? The first one is making use of a credit card, if you have one. While credit cards are usually also pretty expensive forms of finance, they do allow you to spread the debt over a number of months rather than needing to be repaid straight away along with a fee.
Many bank accounts now offer an overdraft facility, which can also be used to cover a short term lack of money. The interest rate on an agreed overdraft is likely to be better than that of a credit card, but your bank may not approve your application. Beware of going ahead and overdrawing without your bank's agreement, as the charges they will levy in this case will be very expensive.
If neither of these options is available to you, and you have no other way of getting hold of money such as borrowing off family, then a payday loan may be the best option. Just ensure that you use it properly, and heed the warning sign it's giving you about the longer term state of your finances.
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