Payday loans might be something that many have thought about but are unsure about. Even though payday loans have higher interest rates, they serve a purpose in letting you purchase something you may need immediately. Learn how to properly use payday loans through the following tips.
Be sure about when you can repay a loan before you bother to apply. Because payday loans carry extremely high interest rates along with significant penalties for non-payment, you do yourself no favors by taking out a loan that you’ll have trouble repaying on time.
If you are considering making use of a payday loan, be aware that you will likely pay an extraordinarily high interest rate. The annual percentage rates can reach 200 percent in some cases. Payday lenders rely on usury law loopholes to charge exorbitant interest.
Understand what APR means before agreeing to a payday loan. APR, or annual percentage rate, is the amount of interest that the company charges on the loan while you are paying it back. Even though payday loans are quick and convenient, compare their APRs with the APR charged by a bank or your credit card company. Most likely, the payday loan’s APR will be much higher. Ask what the payday loan’s interest rate is first, before you make a decision to borrow any money.
Make sure you have a complete list of fees up front. It is not always easy to realize how much will be charged until the question is asked and you receive all relevant information. It is common for individuals to end up with a much higher bill than they anticipated after they sign on the dotted line. Prevent this from happening to you by carefully reading everything you can and always asking questions.
Consider how much you honestly need the money that you are considering borrowing. If it is something that could wait until you have the money to buy, put it off. You will likely find that payday loans are not an affordable option to buy a big TV for a football game. Limit your borrowing through these lenders to emergency situations.
Never go to get a payday loan empty-handed. You’ll need to bring proof of identity items. You must have a proper ID card, proof of banking information and a few of your recent paycheck stubs. Each lender requires different documentation. Call them before you go in to see what they need you to bring in.
Do not enter into a payday loan facility that is not 100% crystal clear, in writing, about the interest rates that will be charged and when the loan is due for repayment. If this information is not presented to you clearly, you should see it as a red flag that the company may be a scam.
If you need money immediately, you may want to consider borrowing from a short-term lender such as Western Union. As long as you do not use it them all the time, payday loans might work out for you.