Payday Loans

3 Tips On Why You Must Think Twice Before Obtaining A Payday Loan

There is a wide array of reasons why you must think twice before obtaining a payday loan. It is no more a hidden secret that payday loan cash advances are very risky loan programs that often push the borrowers into a vicious cycle of debt. That is the reason why it is also termed as predatory lending; in fact, many states have even banned all sorts of pay day loans because of the same reason. Despite all that, if payday loans have still been a very popular financing option for those who often have to face cash crunch and look for instant money solutions, it is only because of the simple reason that payday loan companies have been doing some aggressive marketing regarding these loan products. Just search for payday loans on Google or in any other search engines and you will be bombarded with thousands of websites that promote payday loans and fast and easy financing solutions to almost everybody that has a regular source of income and a bank account in his or her name. If you want to protect your finances, you must keep the following three tips in my mind.

You Get Lower Amount Of Money Than What Is Written On The Check Issued By Your Lender

There are several things that you need to keep in mind before obtaining a payday loan. The first thing that is very important for you to understand is that the check that you are issued by the lender mentions the exact amount of money that you are borrowing, but when you get the same deposited into your bank account, you actually get less than the written amount on check. For consumers, it looks like the bank is charging certain fees as processing fee, but in reality, it is the payday loan company (you are borrowing from) that charges the fees. In shorts, these are hidden charges that you are usually not told about.

Borrowers Often Fail To Arrange Enough Fund In Their Account On The Set

Due Date To Ensure Timely Repayment

The next big thing that you need to keep in mind before obtaining a payday loan is that it is usually very difficult for the vast majority of the borrowers to arrange enough funds to ensure timely repayment; the main reason behind this is the extremely high interest and other charges that payday lenders charge. For every $100 of loan that you borrow for a small period of fourteen days, you have to pay back over $150. This is just an example;; the actual figure ca be much higher depending upon the payday loan company you are borrowing the cash advance from.

There Are Specific Payday Loan Laws In Almost Every State

Before obtaining a payday loan, you are also strongly recommended to educate yourself about the payday loan laws applicable in your state. It is very important for you to keep in mind sixteen states have already banned payday lending while every other state where these types of loans are stll legal have imposed certain restrictions on lenders,, such as the maximum rate of interest they can charge, maximum limit on additional charges, and restrictions regarding other predatory provisions, such as automatic rollovers.

In short, payday loans are easy too obtain, but can be very risky and highly costly.

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