Are you thinking about getting a payday loan? Payday loans are a great way to get quick cash within hours. All you have to do is simply sign a personal check and give it to a payday loan lender for the loan amount plus interest. When your next paycheck comes, the lender will cash the check. However, beware of fraudulent companies who will take advantage of you. Here are 3 warning signs of payday loan lenders to avoid:
Term of the Loan
There are lenders who only allow you to take the loan out for two weeks. Even though your next paycheck will probably be there by the time that two weeks is up, you may need a little more time to be able to pay the loan off. If you think you may need to take out your loan for a little longer than two weeks, then you should look for a payday loan lender that will allow you to have the loan for 30 days. Also, if a lender is only allowing the loan for 7 days, then you may want to check their terms as the interest rate is most likely going to be extremely high and not worth the loan.
Cost of the Loan
When applying for a loan, make sure to find out about all fees and charges that are associated with the loan. There are payday loan lenders that will try to avoid telling you the interest rate or telling you quickly and moving on so that you won’t notice how high it is. Be sure that you go over all costs, fees and interest charges before signing any contract. Also be sure to read all of the fine print. Most payday loan lenders charge a 10% interest rate which is about $10 for every $100 you borrow, there are some that will charge all the way up to 35%. These are the ones you want to watch out for.
Maximum Loan Amount
Watch out for lenders that will allow you to borrow as much as your next paycheck is projected to be. If you do this, you will not have any money left out of your check and they know this. Therefore, you will fall into what is a called a rollover. A rollover is where you will roll the loan over and only pay the interest charges. Then with your following check, you will owe them the loan amount plus interest all over again. Basically, you will be taking out another loan in order to pay off the original payday loan you took out. Then when the following paycheck comes, you will not have enough money again, to pay off the loan and meet your day to day needs so you will have to take out another loan and the cycle will just continue. To avoid this, only get a loan for the amount you originally needed and don’t let them talk you into taking any more than that. This way you won’t have any problems paying off the loan. You will also want to make sure that when taking out a payday loan from an online payday loan lender, that you are working with an honest company in order to protect your personal information.
Always remember, that even though a payday loan may seem like it is so easy, it does cost. No matter how low of a fee you find from payday loan lenders, they will still charge a rather high interest rate when comparing it to traditional loans.