You could be the wisest person in the world when it comes to managing your finances, but you will still run into potential financial crises. It could be anything, it could be a sudden illness, death, or even a trip. That’s the thing, there’s always the possibility of you facing situations where you don’t have the money to get you through the rough spot.
Well, that’s where payday loans come into the rescue. Companies and sites like PaydayMe.com are there to pull you through and buy you the time to get back on your feet. Before you do get into the schemes though, there are five things you should learn about payday loans first.
1. What Is a Payday Loan?
Lenders are well aware that there are people who face unexpected financial setbacks but don’t need to cover them with a huge sum or need a long period before they’re capable of paying it back, which is why payday loans exist. Even referred to as cash advance, in this case, after you borrow a small amount of money, you pay it back depending on when your next payday is.
2. How Does It Work?
A payday loan is as straightforward as a loan scheme as it can get. You borrow an amount and pay it back when your salary arrives. Lenders usually want the cheque to have the amount they lend you along with interest. This way, they have a guarantee that they will get their money back on your next paycheck.
There are some who allow you to extend your repayment date, though you will incur more interest as time goes on and might even end up with additional charges depending on the terms, which is why you should always read the terms carefully for payday loans lest you end up with more debt than you imagined.
3. What Are the Benefits?
The biggest benefit has to be convenience. Lenders know that you need a short amount of money and need it quickly. They don’t care about your credit score as long as you have a stable job or business so qualifying for one isn’t as hard compared to long term debts.
4. What Are the Risks?
Payday loans aren’t free of risks either even if they’re convenient. The cost is the biggest factor. In exchange for the fast approval, you have to pay back way more than you would have to do with stricter loan policies. This is most likely to be the case if you don’t return the money within the deadline, in which case, your annual percentage rate could get ridiculously high.
The interest rate also tends to be higher than regular loans. If you don’t absolutely have to borrow money and have other avenues, it’s best you don’t. However, if you do, payday loans are usually the best option despite the risks.
5. What Are the Rules?
Lenders have to deal with both state and federal laws for payday loans. While a lot of lenders aren’t satisfied with some of the laws, it ensures borrowers don’t get taken unfair advantage of. The laws can also differ according to the state, so you should do separate research on it.
In the end, it’s up to you whether payday loans are worth it. If you are short on funds, you always have your credit card or your family members and friends willing to help you out. At the same time, some prefer not borrowing from someone they know, in which case we always have PaydayMe.com like sites to connect you to lenders.