Payday Loans

Is An Internet Payday Loan A Good Idea?

If you are looking for a one-word answer to this question, the answer is “no”. And, the reason behind this negative answer is the very fact that there are some serious risk factors involved in an Internet payday loan. The negative side of these loans is often covered under the attractive features that lenders aggressively advertise about the same. The positive sides that are advertised include easy cash, instant approval, no credit checking, no faxing, no teletracking, easy repayment terms, and other such things. But, you must also be aware of the negative sides as well, which lenders never advertise about. Following is a brief overview on it.

You Have To Pay Back A Substantially Much Higher Amount Than What You Actually Borrow

The Internet payday loan lenders do not mention the fact that these loans charge extremely high interest. Even if they do mention, they defend it with their logics. For example, if they are charging interest at 200% pa and you are getting a loan of $200 for just two weeks, the interest will amount to only around $15. Since the amount of interest is so small, they use it as a defense that high APR does not make any difference. But, as a matter of fact, there are several additional finance charges as well, which can be as high as $30 on every $100 of loan issued. Besides that, not every company charges a “low” APR of 200%; many companies are very “liberal” with the rates and they “do not mind” charging interest on these loans at 400% pa or 600% pa or even more. Though many states have introduced laws to restrict the rates, the situation is still not much in favor of the consumers. But, awareness of those laws will definitely help you review the loans thoroughly, which will eventually make it easy for you to make an informed decision.

So What Are The Better Alternatives?

No matter how urgently you need some cash to meet your financial emergencies, there are usually a lot of better alternatives always available out there for you. You just have to look into the right direction. Instead of signing up for an Internet payday loan, you can contact your employer and request him or her to provide you a part of your monthly salary in advance. This option seldom fails. If you are a committed employee and have good professional record and your terms with your employers are also very good, there is no reason why your request for an advance against your salary should be rejected. The concept is very much similar to what happens in pay day loan programs. There also, you have to pay back the money you borrow on the next pay day when you get your salary. The benefit of taking an advance from your employer is that you do not have to pay any interest on that. Even if, in rare cases, if your employer charges interest, the amount of interest will be comparatively negligible as compared to the three digit APR charged by payday loans. What is more, there is no risk for either of the parties. On the other hand, as explained above, the non payment of a payday loan on the set due date can have very serious consequences.

Overall, an Internet payday loan is not at all a good idea. You can access a wealth of information on much better alternatives by browsing the section “payday loan alternatives” in the “payday loan” category on this blog.


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