What You Need To Know About Payday Loans
When you apply for any loan, you need to know all the loan fees. Most loans will charge interest and basic processing fees to the initial loan amount.
During an emergency, when you need money fast and you have nothing coming in for at least one week, seeking the help of a payday lender is often a sound decision. Unfortunately, many individuals go into the loan without understanding the type of loan or the costs, which might cause a financial burden.
Understanding the Loan
A payday loan, which is sometimes called a cash advance by lenders, is a short-term loan. It is not designed for long-term needs, and the payment plan reflects that short-term need.
In most cases, they only give the cash advance payment for about one to two weeks before the money is due. When the money is due, they expect borrowers to pay the full loan amount plus the fees and interest.
Borrowers may take out the loan by providing the lender with information about their current income or based on tax refunds. A cash advance on tax refund means that you must provide proof of a tax refund amount and then you are provided with a loan in an amount lower than the rebate.
Otherwise, a pay stub is used to determine how much money you can easily repay on the loan. In all states, the lender is required to provide you with information relating to the APR amount, the cost of the fees, the total repayment amount and when the loan is due. The contract provided with the loan explains all the data in logical terms and within the contract body.
They do not put it in fine print because of the United States Truth in Lending Act. Payday lenders in all states that allow the loan must disclose all information relating to the account in full. While you might understand this information logically, you also need to know how this applies to you specifically.
Before taking out any payday loan, the first thing to consider is the amount they will charge you per $100 you borrow. The cash advance fee is the amount of money you will pay for the loan. Many payday loan fees will also include the cash advance APR in the total amount.
Cash advance fees often range from around 10 to 35 percent of the amount you borrow, depending on the lender. This total amount includes the cash advance interest for the loan duration, which is usually around two weeks. Some lenders might allow as long as three weeks with the same total fee charge.
While the rate might not seem like much, the yearly payday loan interest rates end up around 400 percent or more of the total loan amount. If you do not pay the loan on time, the lender can add late fees and activate that loan’s high-interest rate. The payday loans interest rates cause you to pay a great deal more than the initial amount you expected.
High Rate Reasons
Payday lenders can charge high rates is only for one or two weeks. The very short time means that the lender must set a high cash advance rate to make a profit. Otherwise, the lender would not make enough money to provide loans for the next customers.
The specific payday loan rates are also determined by the area and state laws that regulate the lenders. Some states will limit the amount a lender may charge, while other states will not. States with minimal regulations relating to payday loans often allow lenders to charge higher interest cash advance fees.
Paying the Loan
When paying the cash advance, you want to pay on the day it is due rather than after the due date. Cash advance payments are better paid early because you will end up with high late fees and added charges on top of more interest on the account if you pay late.
Unfortunately, the unexpected occurs in life, and sometimes it might not be possible to repay the loan on time. When this happens, you need to understand your options to minimize the added charges to your account.
Whenever you find that you do not have the money available to pay the full loan amount on the due date, it is vital to get some help. Depending on the situation, you might have a few different options.
The first option you might try is talking to the lender and setting up a payday loan repayment plan. With the plan, you can break down the loan or loans you’ve taken out into multi payment payday loans so you have a little time to get the money. For example, you might pay about half on the due date and then pay the rest on the next two paydays.
If the lender is unwilling to work out a repayment plan with you, getting professional payday loan debt help will provide you with the means of managing the situation.
Getting payday loan debt assistance allows the professional to work out a repayment plan with the lender rather than you worrying about getting the lender to come around. Furthermore, if the situation is beyond the point where talking to the lender is appropriate, a professional can help you get payday loan consolidation loans.
Consolidating payday loans means that you will pay less in interest and will have more time to work on repaying your debts. Unlike the basic repayment option, cash advance consolidation allows you more than two weeks to pay the loan; instead, you are allowed to make gradual monthly payments until the loan is paid in full.
When you decide to consolidate payday loan debt early, you will end up paying a much lower amount than waiting until the situation is beyond control. If you wait until the lender charges late fees and adding more interest, even a few weeks can almost double your loan amount. Payday loan debt consolidation provides a means to manage the situation and stop it before it gets too expensive.
Payday loans consolidation is beneficial to those who take out more than one payday loan they are working on repaying. Payday loan help, such as debt consolidation, provides a way to put all of your payday loan debts into a single debt and then work on slowly paying it over a set period. By using debt consolidation for payday loans, you can better manage the situation.
While you might wonder how to consolidate payday loans, a professional will provide proper guidance through the process. Debt consolidation payday loans offer more financial freedom when the situation gets out of hand. Fortunately, getting help with payday loan debt can provide you with payday loan debt relief.
Payday loans, and cash advances are a complicated process. It is easy to find that suddenly you can’t pay the high fees and interest of the loans; fortunately, help is available to manage the situation if you find that it gets out of hand.