Payday Loans

Risks Asspociated With No Fax No Credit Payday Loan

A no fax no credit payday loan sounds like an attractive financing option, as it allows you to get instant cash even if you have bad credit. Besides that, the process is also a smooth one, as it does not require you to fax any documents or go through lots of paperwork as part of the application process. You can just send your application online and get approved within twenty-four hours or sometimes even less. But, it is very important for you to understand that all these attractions are actually hiding those major risk factors that are usually involved with these types of short-term cash advance programs. Following is a brief rundown on it.

The Repayment Period Is Very Short

When you borrow a no fax no credit payday loan, you are supposed to make the repayment within just a couple of weeks; the due date is usually the next payday when you get your salary credited into your checking bank account. Therefore, just because the loan is very easy to get, it does not mean you should borrow so high an amount that it becomes impossible for you to repay the same on the set due date, which is not very far. You are advised not to borrow more than what you need. Besides that, you must also have a repayment plan ready. Borrow as much as you can afford to repay within such a short period of time. Always remember, the outstanding debt balances on these loans start growing very fast when you miss the due date.

The Interest Rates Are Very High

Obviously, the biggest risk that is involved with a no fax no credit payday loan generates from the extremely high rate of interest that lenders charge on these loans. The APR (annual percentage rate) on these loans is usually in three digits, which can range anywhere from 150% to 750%, or in some cases, even higher. For example, you should expect to pay somewhere around $30 on a $100 of loan. Besides that, there are also additional finance charges, such as loan approval fee and others. If you are sure that you can afford it, you can go ahead. But again, once you miss the date, you are in a big, big trouble. Just read the provision of rollover.

Renewal Of Payday Loan On Nonpayment

When you fail to make the repayment on a no fax no credit payday loan on the set due date, you get one-month extension. It means the lenders will try to collect the debt again on the next payday. In the first look, it looks like a big relief, but when you find out that you will actually be charged interest and other hefty penalty charges on the loan for the extended period of time, you will realize that you are now trapped into a quagmire of debt. Just one month of extension can cause your debts to grow as high as double or sometimes even triple.

Now that you are aware of the risk factors associated with a no fax no credit payday loan, if you still want to go for it, you are advised to first get yourself educated on the payday loan laws applicable in your state so that you can protect yourself from illegal lenders.

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