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We all go through a financial crisis at least once in our lifetime. It may be due to a low salary or unemployment. In such situations, individuals steer towards borrowing money and taking out loans for a specific period. Sometimes, the process takes too long while your financial emergency looms before you. Many now opt for payday loans instead of cash advances and bank loans to avoid the time-consuming procedure.
Lenders offering cash advances and banks also check your credit score. However, your credit score does not matter much for payday loans. It does factor in a bit while applying, though. Payday loans are notorious for imposing a hefty interest rate. It is also easy to get into debt because of that. Here are some tips about payday loans that might help you avoid debt.
Check the Interest Rate
Payday loans are expensive, and they are known for their high-interest rates. However, they are also convenient for fast cash loans. Whenever you apply for payday loans, check the interest rate. If you are sure you can pay the whole amount back with your coming paycheck, then go for it. Don’t just settle for the first lender you come across. Check every company around you and ask them for their rates. Go for those who aren’t imposing a high-interest rate and whose package appeals to you. Read over the contract carefully and see that the terms and conditions are in the correct order. When you are sure that everything aligns, apply for the loan.
Double Check the Lenders
Only licensed lenders are allowed to offer payday loans. Never go for unlicensed ones: they may scam you. To check if your lender is licensed or not, inquire about it at your consumer affairs office. While applying, ask the lenders a series of questions. They might be able to help you determine the credibility of your lender. Ask what the borrowable amount will be and if any additional fee is required.
Inquire about the consequences if you can’t pay it back on time. Make sure that the lender includes these clauses in the contract. Ask about the cooling-off period and the duration you can cancel the loan without penalty fees. Don’t forget to ask the lender for a contract copy. If they don’t give you one, avoid borrowing money from them.
Don’t Borrow Twice
Payday loans impose a high-interest rate. Applying for one repeatedly can put you in a cycle, and your debt may increase. Consider seeing a debt counselor if you find yourself applying for payday loans more than once. They will help you escape your financial crisis and may provide alternatives to payday loans. Checking your credit score now and then will give you an insight into where you stand and if, by applying for loans, you will be able to give it back.
Consider payday loans only when you are in dire need of money. Don’t resort to them twice, or you will fall into a never-ending cycle of paying more than you borrow. This will affect not only your financial standing but also your health.
Endnote
Payday loans are prevalent nowadays due to their feasibility and convenient features, such as online applications and lack of credit checks, and one can e-transfer payday loans. They are helpful when you need emergency cash and cannot wait for the lengthy application process for cash loans. They also usually have a short payback duration on your next paycheck so that you can return the money quickly. However, don’t keep coming back, or you may fall into debt cycles.
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