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Shopping For A Payday Loan
by: Max Hunter
You wouldn't consider buying a new pair of shoes, a
bicycle helmet, or
an extra pair of jeans without trying them on first to
make certain
they fit. After all, a pair of shoes that is two sizes
too small will
never fit and they amount to money wasted. Shopping for
anything –
products or services – is pretty much the same. The
smart consumer
does some research, tries a few on for size and makes
sure that the
purchase ultimately meets his or her needs in a variety
of ways.
Finding the right payday loan to fit your needs is
essential. You
don't want to end up paying $50 in loan fees for
something you could
have gotten for $20 from another lender. And, just as
shoes come in
all sizes, shapes and colors, there are numerous
variables associated
with payday loans – items like the amount of time you
have to pay back
the full amount, the loan fees that are involved, and
whether or not
the lender will allow you to roll the loan over if you
can't pay it
back on time and how much that will cost.
Repayment Times - When you are searching for a payday
loan, you need
to examine how long the lender allows for the loan to be
repaid. Time
is a major factor to consider. For example, you just had
a major car
breakdown and it will cost $500 to fix it. You just got
paid last week
and don't get paid again for another 25 days. You have
already paid
all of your regular bills and have just enough money
left to feed your
family for the rest of the month until payday rolls
around again. You
know that you could pay to have the car fixed on your
next payday,
because you have fewer standing obligations to meet with
that check,
but in the meantime, you have to get the car repaired
immediately so
you can get back and forth to work. There are dozens of
payday lenders
to choose from, but about half of them only loan money
for 14 days
maximum. That doesn't do you much good, since your
payday is 25 days
away. Therefore, you need to consider only those payday
lenders who
can make loan arrangements extending out 30 days. That
gives you time
to get your paycheck and pay back the loan on or before
the due date.
Loan Cost – A survey of Internet payday loan websites
reveals that the
average loan cost is $25 per $100 borrowed. At this
rate, an
individual borrowing $500 would actually pay the lender
$625 (the
amount loaned, plus loan costs) at the end of the loan
period. There
are a few sites that advertise loan costs as low as $10
per $100
borrowed, in which case the total cost for borrowing
$500 would be
$550. However, some lenders disguise their actual fees
by quoting a
rate per $100 and tacking on an additional fee as well.
For example, a
fee of $25 per hundred, with a $10 additional fee,
actually amounts to
$35 per $100 borrowed, for a total cost of $675 for a
$500 loan.
Borrowers should carefully examine the stated loan costs
and any fine
print that identifies additional fees carefully before
entering into a
loan agreement with a lender. Be aware that, if your
bank account does
not contain sufficient funds when the lender attempts to
withdraw the
amount you agreed to pay, the lender can also charge
bounced check
fees, which range from $15 to $30. The good news is that
increasing
numbers of lenders doing business on the web has
resulted in some very
competitive payday loan terms being available. But,
remember to shop
around and find a good fit.
Borrowed Amount – The amount that you can borrow from an
individual
lender is also a factor that needs to come into play in
your decision
regarding which loan to take. Some lenders loan up to
$1,000, $1,200,
or even $1,500, depending on the size of your monthly
income. Others
may only lend up to $500 and, in fact, the average size
loan made from
Internet payday lenders is $500. How much you apply for
should relate
directly to how much you absolutely need and how much
you can afford
to pay back without having to roll the loan over and
incur additional
loan fees.
Reputable lenders – One of the most important things to
consider when
shopping for a payday loan is the reputation of the
lender.
Investigate online and see which sites are recommended
most
frequently. If a lender is not licensed to make loans in
the state
where the business is situated, that can be a warning
sign that the
business is not the most reputable. Remember, if you get
an online
loan, you are going to be giving this entity your
account numbers and
you don't want to give that kind of access to a business
that doesn't
have a good track record already established.
Ultimately, payday loans can serve an excellent purpose
in an
emergency situation, especially for those who don't have
a good credit
record or haven't used credit before and don't have a
credit rating.
However, just like everything else you shop for, make
sure you get the
right loan for your situation and circumstances. |
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