Payday Loans

Four Things You Can Do To Avoid Predatory Payday Lending Companies

There are several reasons why many people get trapped into the borrowing-rollover cycle created by predatory payday lending companies. Some most common reasons include the “assumption” that there are no better alternatives available, limited resources, bad or poor credit situation, and immediate need of cash. If you are already one of those who understand that payday lending is bad and that it actually pushes consumers into deeper debt problems, the following suggestions must be just common sense for you. For others, these are “valuable tips”.

Do Not Go For It If Your Lender Is Offering You An Attractive Offer That Sounds “Too Good To Be True”

If you find out that your prospective lender is suggesting you something that sounds illegal or is questionable, do not go for it. Do not sign up for a payday loan program just to get some instant money; you must first make sure that you understand the process and that everything is reasonable and in line with the law. Predatory payday lending companies often make lucrative offers to consumers that sound too good to be true, but in reality, there are always lots of hidden catches involved in it. You may not be able to see those hidden catches right in the beginning, but they are likely to come on surface at a later stage when you find out that you have been trapped into an unusually very expensive loan program. You may be offered a $300 of loan at $25 as interest, but when it is time to make the repayment, you may get shocked to find out that your lender has actually debited your checking bank account for over $100 just as their fees (that may include processing fee, check collection fee, and lots of other charges that they never explained clearly in the beginning). It means you may end up paying over $400 for a loan of $300 taken for just two weeks. Worse, if you do not make the repayment in time, your loan gets extended for another month. Since, your principal amount has become over $400 now, you will be liable to pay interest and all other charges on this amount. This means, just one month of rollover may make your outstanding balance almost double, or in some cases, even more than that.

Never Sign A Contract Unless You Get A Clears Understanding About The Terms And Conditions

If you want to avoid predatory payday lending companies, you must be very careful before you sign any contract for any payday lending program. Do you understand all the terms? Are you sure there are no hidden charges or hidden catches involved? If you any queries or questions, you must seek answers for them from your lenders. You must have a clear understanding on what you are paying for. Do not go for a program that charges prepayment penalty or a hefty amount of money as processing fee only. Sign a contract unless you are 100% satisfied that the program is safe, reasonable and affordable. You must do your calculations while keeping in mind your regular monthly income. If you know that you will not be able to make the repayment of the loan in time, it is not wise at all to still sign for it. You may be able to meet your urgent expenses immediately, but the next month, you will again find yourself into another financial crisis, this time a deeper one.

Borrowing From A Reputable Bank Or A Credit Union Is Always Be A Better Alternative

The offers made by predatory payday lending companies may sound more attractive, as they often offer instant cash, fast approval, no credit checking, fax-less process, no doc process, and the “convenience” of due date extension. But, in most cases, things are not as easy or as convenient as they are promised; in fact, they are often just the other way round. Payday loan is expensive and very dangerous that can put into never-ending cycle of debt. Therefore, it is always wiser to try other alternatives that are safe, reasonable and affordable, such as borrowing from a credit union or a reputable bank. Many banks and credit unions these days offer short-term credit programs for consumers. If you have a decent credit score, you can easily qualify for it. Even people with bad credit can qualify for these programs; it is just that they will be charged a little higher interest than usual (which is still much lower as compared to what payday lenders charge). It is true that you may not get approved within 24 hours, but short-term credit loans often get approved within 2-3 days, which is obviously not too much waiting.

Do A Thorough Comparison

Never accept the first offer that comes your way. In order to avoid predatory payday lending companies, you must always do a thorough comparison shopping. Get quotes from at least 3-4 reputable lenders and then compare the terms they are offering. Though a low rate loan may look like an attractive option, it is important for you to keep in mind that a low rate loan does not always mean an inexpensive solution. There might be several hidden expenses involved that you may come to know about at the time of the repayment. So, make sure you do your research thoroughly.

No matter how carefully you do your research, you may still get caught into the traps of predatory payday lending companies unless you are well aware of the payday loan laws applicable in your state. Many states have strictly prohibited high interest lending.

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