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The Cost of Payday Loans
By Steve Cope
You need a cash advance immediately, but are too shy to ask relatives or
friends, and are scared of the paperwork involved in a bank loan. Shed all your
worries, for help is a mouse click away in the form of
payday loans online. Payday loans are one of the most convenient ways of
getting a cash advance today with practically no paperwork or other hassles.
Defining Payday loans
Payday loans are a short-term cash advance, when it is needed the most...usually
between paydays! Payday loans are a great way to get some cash to tide you over
to your next paycheck. The goal of payday loans is to assist you with finances
to meet that unforseen requirement. The money is given as a cash advance and is
directly deposited into your personal checking account, after which the cash
advance funds, plus a fee, are taken out of your account at the end of the loan
which usually is your next payday.
However, a payday loan is no substitute for long-term financial planning. This
cash advance should only be taken to meet urgent financial needs until your next
payday. It is only in emergencies that payday loans come in handy. Bad
credit payday loans
also bail you out of situations of bounced checks and late payment penalties by
making the appropriate cash advance available.
Understanding The Cost Of Payday Loans
Forewarned is forearmed! So it is with payday loans. If you know what this kind
of cash advance will cost you, you will be in a better position to weigh the
pros and cons of opting for it. This way you will also know exactly what amount
you need to pay back to the payday loan companies.
Your first step should be to find out the best rate of payday loan on offer.
Whichever payday loan company you may choose you must know what will be the
fixed amount that you will owe upon completing your payday loan.
Usually most payday loan companies charge around $20 to $30 per $100 of cash
advance. To ensure that there are no ambiguities, insist that your final payday
loan amount is spelled out in dollars and cents. This will help you know what
you need to pay, when your payday loan is due.
To judge the best deal, go for the payday loans company that is offering a lower
APR. Usually, most payday loan companies provide a cost-breakdown per 100-dollar
increments that coincide with the rate.
Furthermore, most payday loan fees are based on the duration of the cash
advance. The standard APR for most companies falls into the 400 percent range.
As an example, suppose you were to borrow $100 at a fee of $20 for a 2 week
period and if you did not pay if for a year, your service charge would be $520
for a 520% APR. To which you need to remember to add the original $100 that you
borrowed.
There may be a situation where you are unable to repay the full amount of the
cash advance to the payday loans company. In such a situation, the payday loans
company generally charges the payday loans finance fee and defers the principal
payment over a longer period of time, usually another 14 days.
The Other Hidden Costs
There are several hidden costs in
faxless payday loans! Remember, if you are unable to
pay this cash advance and you happen to lose your job, the clock does not stop.
If you default on the cash advance, which includes the principal plus interest,
the payday loan company will reclaim the entire amount plus all the interest
accrued on this loan. A payday loan company may exercise a number of options to
collect this cash advance:
·Sue you for the funds.
·Use a collection agency.
·Enter your details into a bad credit database which may limit your capacity to
cash/write a check for commercial purposes
·File a legal complaint for bounced-check charges that may leave derogatory
information on your credit file.
By now, it should be clear that it is not prudent to go for payday loans without
being aware of the repayment structure. To play it safe, make sure that the cash
advance is repaid on time to the payday loans company. Read the fine print
before you sign the agreement and understand the worst-case scenarios before
deciding to take a payday loan. Once you understand the costs involved in
obtaining a cash advance, you are a step nearer to fully enjoying the benefits
of payday loans About the Author At the A1 Payday Advance website you can apply for a payday loan with us, read news or articles about the payday loan industry or find other payday lenders to meet your needs. Visit our payday loans site when you need a little extra cash. To receive the article
by email simply send a blank email to:
cost-of-payday-loans@myarticleannouncer.com.
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