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Payday loans are a way to get quick cash to get yourself out of a financial emergency. Although these loans are often very helpful, they do have a downside. You’ll find more information about the pros and cons of payday loans in this article.
Some payday loan outfits will find creative ways of working around different consumer protection laws. They put in charges that really just equate to loan interest. After it’s all said and done, the interest rate can be ten times a standard one.
Before applying for a payday loan have your paperwork in order this will help the loan company, they will need proof of your income, so they can judge your ability to pay the loan back. Take things like your W-2 form from work, alimony payments or proof you are receiving Social Security. Make the best case possible for yourself with proper documentation.
If you have to use a payday loan because of an emergency, or unexpected event, understand that many people are put in an unfavorable position by doing this. If you do not use them responsibly, you could wind up in a cycle that you cannot get out of. You could be in debt to the payday loan company for a very long time.
Before taking the plunge and deciding on a payday loan, consider other sources. The interest rates for payday loans are high and if you have better options, try them first. See if your family will loan you the money, or try a traditional lender. Payday loans should really be a last resort.
One key tip for anyone looking to take out a payday loan is not to accept the first offer you get. Payday loans are not all the same and while they generally have horrible interest rates, there are some that are better than others. See what types of offers you can get and then choose the best one.
Take advantage of the BBB’s website to research any payday loan companies you may be considering. There are many shady businesses who are ready to scam people who are in dire need of assistance. Take the time to know whether the company you are interested in is on the up-and-up.
Go with a company that is a direct lender instead of an indirect lender. There are Lending Tree-style sites that will forward your information to multiple lenders, but using them is ill advised given the information you have to reveal about yourself.
If you are in the military, you have some added protections not offered to regular borrowers. Federal law mandates that, the interest rate for payday loans cannot exceed 36% annually. This is still pretty steep, but it does cap the fees. You should check for other assistance first, though, if you are in the military. There are a number of military aid societies willing to offer assistance to military personnel.
A unwise payday loan can garner you quick cash with costly repayment terms and make your financial situation worse in the long run. Utilize the knowledge you’ve just learned in order to make the best decisions on payday loans.