A payday loan is not always a bad thing, but it might not be the good thing you think it is either. It is better to have some options, in case something does not pan out. Today’s topic is about payday loans, and what you should and can expect.
1) You do not have collateral to worry about. The one thing the lender does ask for is proof that you can pay everything back. A payday loan is for someone who is actively employed, and someone looking for some extra cash.
Most lenders will not work with someone who cannot repay the money.
2) Banks might be guilty of a lot of things, but a bank associate will(generally) offer clients a low rate loan. The same cannot be said for a third-party lender. You can expect high-interest rates. According to the National Credit Act, a lender can charge up to five-percent every month. They can go as high as thirty-percent for a six-month contract.
Remember that most loans are one month, except in that rare instance(the six-month loan agreement). It is something to think about if you plan on going down that road.
3) You need to watch for hidden fees. There is an old saying:
“If it sounds too good to be true then it probably is”.
This is one of those instances. Say, for example, your lender decides to take pity on you. He agrees to greenlight an exceptionally low rate for your higher than usual loan request. There is something else at play here. He is not doing this out of the goodness of his heart.
He wants to be paid, and he expects to get paid. You could be paying more in interest and other fees than your total original loan amount. That is why we encourage you to read over all the terms and conditions.
Ask the guy about it if something sticks out at you. It is better to know the game ahead of time before you start to play.
4) Think about the possibility of debt. Debt is an ongoing thing when it comes to payday loans. Say, for example, that you cannot pay back the loan you took out. That balance is carried over and more charges are added. You could land yourself in hot water if you keep it up for a few months.
This is another reason why we tell you to have a backup plan, just in case. We also advise that you choose an alternative route if you are low-income. We say that based on personal experiences.
5) Your lender might not be genuine. Please pay close attention or who you work with concerning your loan. That is why it is better to check your desperation( if you have any) at the door and focus on someone who can help, not harm you.