Payday Loans

How To Review Payday Loan Fee Before Signing Up For A Cash Advance?

Short-term cash advance programs are popular; no doubt about that. And, why not? These small loans are very easily accessible everywhere. Almost anyone can qualify for it. But, at the same time, you must not forget the very fact that thousands of consumers are getting trapped into serious debt problems because of the extremely high payday loan fee that these loans charge. When you borrow a payday loan, you have to repay the loan within a very short period of time, usually within one week to four weeks, at a 3-digit APR. Besides interest, there are other hefty amount of finance charges as well that you need to pay. In general, a $300 of payday loan borrowed for a 14-day period can cost you $500 or even more. And, the horror in the story begins when you fail to make the repayment in time, because then, you are charged interest for every single day you delay in making the payment along with a substantial amount of penalty fee. Your debt situation can soon go out of control if you keep making defaults. Therefore, if you are considering borrowing a payday loan, you are strongly recommended to first do a thorough review of the interest and other charges that you have to pay back along with the loan. Following is a brief rundown on some of the things you can do to review the fee before signing the loan agreement.

Read The Loan Terms Thoroughly

Do not sign the loan agreement immediately after receiving it. Take some time to read it thoroughly, especially the clauses that explain the terms regarding payday loan fee and interest. As per the laws applicable in the United States of America, it is legally mandatory for all lenders to explain all the provisions regarding the loan clearly in a written loan contract. Make sure that there are no hidden clauses. If you are not sure about something, do not hesitate to get the clarification – again, in writing.

Be Aware Of The Laws Applicable In Your State

Once you do a thorough review of the loan terms, the next thing you have to do is to get yourself educated on the state laws related to payday loan. To start with, find out if payday lending is legal at all in your state, as many states have put a ban on it. There are states where either payday lending is completely banned or where there are strict laws that impose small loan rate cap (which means the rate of interest must not be extremely high). Look at the restrictions imposed by the state laws, especially regarding the payday loan fee. Match the information with the details provided in the loan contract in order to confirm that the lender you are considering borrowing the money from is not charging you more than the legal limit allowed in your state.

Review Your Repayment Ability

The last thing you have to do is to review your repayment ability. The above two steps will help you understand the actual amount of money that you will have to pay back on the set due date, which is usually the next pay day. Now, your task is to find out if you are financially capable enough to make the repayment in a timely manner. Educate yourself about the consequences of nonpayment of debt on the set due date, such as the provisions of rollovers and other repayments options explained in the loan term. Again, do not forget to compare the terms with the restrictions imposed by your state laws. For example, automatic rollovers or renewals of loans are not permitted in some state. Is the prospective lender following all the laws properly?

Overall, if you follow the above three steps thoroughly and do a thorough review of the payday loan fee as explained above, you will be in a better position to make an informed decision whether you should go ahead and borrow a payday loan or try some other alternatives. In most cases, there are always better alternatives available; you just have to look at the right places with the right approach.

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