Things to Consider Before Applying for Payday Loans
If you are facing a financial emergency, money is hard to get by. Since the need is urgent, you cannot rely on traditional bank loans or credit union loans. If your friends and relatives do not have the extra money to spare you, it is time to consider payday loans.
Payday loans are popular because you can receive the cash within a few minutes of your application. Whether you need $1000 or $4000 loan, the money will be in your account shortly after approval. However, before you fill out that application form, you should compare payday loan lenders. To identify the right one for your needs, you should look into the following things:
You must understand that in the world of lending, there are 2 types of interest – variable and fixed. With a variable interest rate, you should expect that the amount you repay would depend on different financial factors. The arrangement can lead to lower repayments over time. The thing about the variable interest rate is you have little control over how much you need to repay every payment period.
The fixed interest rate, on the other hand, refers to high but constant repayments amounts. This is the most common because you generally pay the same amount over a certain period of time. If it is your first time, it helps if you can consult a financial advisor to determine the type of interest that suits your financial capabilities.
As much as possible, you should pick a lender that offers a lower interest rate. It will not hurt if you try to negotiate with the lending company to lower the interest rate. You will be surprised to know some lenders that oblige for the sake of doing business.
The next thing that you should consider is the terms. Loan term refers to a specified repayment schedule. Since you consider a payday loan, the term is usually one calendar month. With this, it is crucial that you ask yourself if you can afford to pay the loan back on time.
Payday loans are considered more expensive than regular loans because of the interest rate and terms. You have to be extra careful when it comes to missing monthly payments if you do not want to encounter more problems in the long run.
Before you finally sign the contract, make sure to read the fine print. This may sound boring but it is crucial. In the contract, you should read the penalties for failure to repay. It is vital that you understand the risks and the repercussions of late or failed repayments.
Applying for any type of loan can be stressful but with the right lender and the type of loan, you will not be worried about being buried deeper in debt. There are many lenders you can consider but the key is to do your research at the onset. You can start by reading reviews or ask for recommendations from friends and co-workers.