There are many times when your financial crisis runs high and there is no one to run to, to help you out financially. Banks are not willing to lend money; friends and family are not there to rescue you. It is at such times that people opt for payday loan. These are loans that are usually short-term loans with high interest rates.
Payday loans are online loans which are easy to get. But the high interest charged is terrifying. If the people getting these loans are able to pay back the amount within the specified period, then getting such payday loans are fine. However if they are not able to repay the amount within the limited time, they switch over to rollovers and extensions. This is where the nightmare begins as the interest rates increase and additional fees are added along with it.
What should you know about getting Payday Loans?
Check Conditions: Payday loans are short-term loans. Due to this feature of short-term, the interest rate is high. There are many lenders who offer low APR or interest rates. There are some lenders who offer to decrease the loan rate if the borrower has a good payment record. Do not get cheated. Check if these are true before accepting payday loans.
Direct lenders and contractors: Payday loans are provided by direct lenders while others serve as an in-between agent with other lenders. Be wary of who is going to lend you the money and what are their terms and conditions.
Repayment of loan: The duration of repayment of loan should be confirmed. Even though these are short-term loans which serve to supplement your income before your next paycheck, some offer longer term for payment. However the longer the duration, the higher is the interest and the principal that will have to be paid.
Rollover and Extension: Some services offer rollovers on the loan. Some offer extensions, but by extending the time of payment or rolling it over, you have to keep in mind that the interest rate increases and you will end up paying a very high amount.
Customer Support: There are many who run into trouble with the loan amount. Unless there are good customer support services available, you cannot clear your issues regarding the loan and the interest. Make sure that there are good online support service and live chat so that you know where you stand.
The Bottom Line
Payday loans are usually charged with high interest while the payback period is less. It is hence best to choose a better form of getting your loans. However if there is no other choice, make sure you can pay the interest and repay the amount within the stipulated time. Understand the terms before you get into a contract with such lenders as you will lose a lot of money in the end if you are not aware of what you are getting into. Online loans are best avoided if we learn to spend within our income and not beyond our income.