If you’re wondering if a payday loan is right for you, read this article which provides answers to some of the most common questions people have before going into debt.
What is a payday loan?
A payday loan is the promise of a quick, small amount of cash from a lender. This money can be borrowed for any purpose, but most often it’s used to cover a temporary expense. If you don’t have the money to pay your bills, you can get one of these loans. However, this type of lending has become increasingly controversial and could ultimately lead to problems with credit reports or even arrests if you’re unable to pay back the loan.
A payday loan is just like a large loan, typically for small amounts of money between $100 and $1,000. It’s made on the spot and you have to pay it back by the next payday. These loans are usually given out without any collateral, so they don’t require that you be able to prove your good credit. They are usually repaid over time with a fee at each “installment” or when the loan is fully paid off.
How much will my loan cost?
Most people know that payday loans are expensive, but only a few of them know exactly how much they’ll be asked to pay. The average interest rate on a $100 loan is around $30 and the APR will be between 390% and 3,990%. This means that over 3 months, you’ll pay anywhere from $390-$3,990 for a loan which could end up not even lasting you that long.
Most loans are dependent on your credit score. If you need a quick loan and don’t want to wait in lines, online payday loans may be you best option. They tend to charge higher interest rates than brick and mortar banks, so it will cost you more in the end.
Are they good for emergencies?
Though emergency credit can be a good option, they are not meant to be used as a long-term solution.
The answer is yes, payday loans are a safe way to borrow money when you need it. They can be helpful in emergency situations and people should not only go to their bank for loans and take out a mortgage. The rates at which lenders charge vary from lender to lender, but in general, the interest rates are much lower than the rates charged by banks and credit unions.
Am I eligible for a payday loan?
No matter what your financial situation, there’s likely a payday loan that would work for you. However, it’s important to note that payday loans are not typically offered to people who don’t live in the United States.
In order to be eligible for a payday loan, you must be able to prove you are in need of the money. Having your checking account overdrawn or having credit card debt is not enough proof of financial distress. You will also have to provide proof of your employment.
Conclusion
It is important to note that payday loans should not be used as a long-term solution. They are short term and high interest loans that can have dire consequences if you don’t pay them back. If you need help or have financial difficulties, it is always best to speak with a professional first.
For those who have a payday loan, there are many questions and concerns. There are risks involved, but payday lenders should be able to provide the answers people need. For instance, about what types of loans are available, how to qualify for them, and the cost of each type.