Whenever you are in need of money to pay for some home and personal expenses, you would possibly think about applying for payday loans. At some point, this is often times the most sought after solution for most regular employees caught up in this problematic financial turmoil. For them, the idea of money coming in the form of the pay check with the loan able to keep things tide over until the next pay is due. When your payday comes, you should pay back the lending party through a post-dated check. For many, this is the best and the easiest solution to free them from the commitment to pay another loan or fulfill other financial obligations.
Also referred to as cash advance loans, check advance and deferred deposit check loans; payday loans though simple to commit with in the eyes of many, there are some factors that most people fail to see. Just like all other matters, this type of loan also has its own set of downsides. This article will try to provide you with some bits of information that can be useful when you need to analyze further if this type of loan is appropriate for your situation or not.
First off, when you look closely into the computation of payday loan's interest rate, you would certainly discover that the rates applied are somewhat high in general. If you hop around from one lending institution to another, you are sure to observe that most of them charge an expensive fee or high percentage of the whole amount that you loaned for. Take this for example, there are cases when a borrower applying for a $200 payday loan would be required to issue a post dated check amounting to $230 with an agreement that the check would be posted or deposited in the bank fifteen days after you borrowed the money or presumably on your next payday. But wait! This is not the only charge that you would need to pay because in case the annual percentage rate is set at 390%, then you have no other choice but to pay the very exorbitant charge based on what is actually computed. In addition to this, when you decide to continue to roll the loan over, the finance charge would at the same time grow with it. This means you will need to pay a higher price, which can be very hurting to your pocket.
This is the actual scenario and if you are not particular with this, you would certainly be caught up in a situation wherein you have no other choice but to pay for the inflated interest rates set by the lender itself. This is why before you immediately plunge into availing payday loans when you need urgent cash, it would be a lot wiser to first spend time going over small personal loans from banks or a cash advance from your employer. Searching around for other credit offers would be ideal especially if you are employed.
Even if a payday loan is a very easy to accomplish solution to resolve your immediate need for cash, it would be more ideal to give it a careful thought first. Try to look deeper into the important and crucial negative aspect of getting this kind of loan. It would be helpful for sure!