Payday Loans

Why Online Pay Day Loan Programs Do Not Make A Wise Financial Decision?

You may be wondering if online pay day loan programs come with so many attractive features, why financial experts do not recommend it for consumers. It is true that these lending programs look very lucrative, but it is also true at the same time that they come with some serious risk factors. Therefore, before you sign up with an internet based payday cash advance, you are advised to be well aware of both its pros and cons. The following information should help you in this regard.

It Is Very Difficult To Locate Internet Based Lenders

When it comes to understanding the risks associated with online pay day loan programs, the first thing that is very important for you to keep in mind is that the lenders who operate their business from Internet are often very hard to locate. If, at a later stage, you find that they are violating the payday loan laws applicable in your state, it will be very difficulty for you to take legal actions against them. You state laws do apply to them but it is often not an easy task for the legal authorities to catch them.

You May Be Charged Over $50 For Every $100 Of Loan

It is true that online pay day loan programs are easy to qualify for. No credit checking is done. Even the application process is very simple one. Approval comes within a matter of just a few hours and you get instant cash right in your checking bank account. But, despite all these lucrative features, you should not forget that these loans cost a lot of money in terms of interest and additional finance charges. Except a few states, where serious steps have been taken to restrict the maximum interest that can be charge don these types of short-term cash advance loans, in most other states, the laws are still not strict enough to control the cost of these loans. You can realize how costly these loans can turn out to be for you with the very fact that you can be charged over $50 for every $100 of loan issued for a 14-day period. It means if you are borrowing $500, you must be ready to pay back over $750 on the set due date which is just a couple of weeks ahead.

Hefty Penalty Charges

Another major problem with online pay day loan programs is that they charge hefty penalty fees in case the borrower fails to make the repayment on the set due date. In addition to that, you are also charged interest for every single day of delay in repayment. Considering the very fact that these loans charge an APR (Annual Percentage rate) of over 200% – 600% per annum, the amount of interest can be so high that the overall outstanding balances becomes double or triple within just a matter of few weeks.

It is because of the above-mentioned risk factors why online pay day loan programs are not considered as a very wise financing option. There are several better alternatives available out there. You can find plenty of information about the same by visiting the section “payday loan alternatives” in the “payday loan” category on this blog.

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