Payday Loans

Does Payday Loan For Self Employed Make A Good Financing Option?

Though payday cash advances usually are offered to salaried individuals, there are still many companies out there that offer payday loan for self employed. But, in order to decide whether it is a good financing option for you or not, there are several factors that you must take into your account. The eligibility criteria vary significantly from one lender to another. Besides that, you also need to review the interest rates and other terms of loans thoroughly before you sign up for a payday cash advance. Following is a brief rundown on how to make an informed decision in this regard.

Are You Sure There Is No Better Alternative?

When it comes to deciding whether a payday loan for self employed can be a good option, the first thing you have to do is to look at the alternative options available out there for you. You are looking for these loans probably because you need instant money to meet some temporary financial emergencies. Some better alternatives that you may like to consider include borrowing from a friend or family member, requesting an advance from one of your clients, and even getting a cash advance using your credit card. One of the major problems with these short-term payday cash advances is that they charge an extremely high interest rate. It means any other option that allows you to borrow instant money at a comparatively lower rate and more favorable terms makes a better alternative for you. Though even credit cards also charge a high rate of interest, it is still much lower as compared to the rates charged on payday loans.

Make Sure You Can Afford The Repayment

If you are 100% sure that there is no better alternative to a payday loan for self employed, you must first review the terms and conditions of the loan thoroughly. The idea is to find out if you can afford to make the repayment on the set due date. The situation can be very troublesome for you in case you fail to repay the loan in a timely manner. The repayment period is usually very short, just a couple of weeks. So, look into your finances and find out if you will be having sufficient amount of money in your bank account on the scheduled due date. If you are not sure about whether you can afford the repayment and still borrow this loan, it can be very risky and you are very much likely to be pushed into a serious debt trap. Extremely high rate of interest, hefty penalty charges, automatic rollovers and unfair collection practices are some of the major risk factors associated with these loans that you must be well aware of.

Terms Of The Loan Must Meet The Standard Set By The Laws

Even if you are sure that you can afford the repayment on a payday loan for self employed, you must first go through the payday loan laws applicable in your state. The idea is to find out if the loan terms offered by the lender are in compliance with the laws. Most states have imposed certain limitations on the interest rate, the maximum amount of money that can be issued as a payday loan, the additional finance charges that can be charged, collection charges, and whether the rollovers should be allowed or not (if yes, how many times). If you notice that the terms offered by the lender are violating some of the laws, you should obviously stay away from them. In fact, it will be better if you file a complaint against them with the federal Trade Commission or with your state authority.

Overall, as you can see, if you follow the above three steps thoroughly, you will definitely be in a much better position to decide whether a payday loan for self employed makes a good choice for you. Your awareness is the key factor.

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