Suggested by the name itself, a payday loan refers to a particular type of lending where the borrower receives a one-time payment by the creditor and agrees to return the sum plus a fixed service fee within a short period of time. This usually means on the borrower’s next payday. These loans are unsecured, meaning that the borrower does not need to put up any collateral at all in order to receive the money.
In itself, this leads to two things. Firstly, the amount that payday loans creditors are typically willing to lend isn’t large – it varies between $100 and $1000 depending on each state’s regulations. Secondly, the borrowers’ demographics consists of groups that are mainly under-educated, recent immigrants, newly divorced or from low-income background. And despite the amount of public criticism describing payday loans lenders as viciously exploiting the financial vulnerability of the above mentioned groups, truth is that payday loans are not as dangerous to the lenders as some people had described them.
In fact, the popularity of this type of lending is growing really fast compared to other forms of credit which some studies have shown to carry much more risk for the borrower. Moreover, the increased presence of digital technologies in our everyday life has brought up a great number of creditors who offer the service of quick payday loans online.
The ease of access to payday loans, as well as the great diversity of lenders online, however, can sometimes be of misleading effect to the borrower. Payday loans online can be a slippery slope if not used correctly and without any research done prior to the application. This means that you definitely should not fall for the first website that promises speedy payday loans with 100% approval, for instance.
Quick Payday Loans Online: What You Should Know
Trying to get your head around the countless online lenders that promise high-speed payday loans can be a difficult task even for the calmest person, so the first thing you should do is to arm yourself with patience.
Think about how much you need
When you are fully ready to begin your journey, you should carefully consider the amount of money that you need to borrow. And this doesn’t necessarily mean over-evaluating merely for the sake of it. The thing is that the many online payday loan lenders vary not only in the fees they charge, but also in the amount of money they are willing to lend.
Hence, it would be highly unreasonable and time-wasting if you seek out the services of lenders who specialize in managing $100-$350 loans when the actual sum you want to borrow is, for example, $1000. Logically, once you have established the amount of money you want to borrow and found the lenders who operate within the given limits, the next factor you should consider is its interest rate.
Take APR into consideration
Online payday loans, exactly like regular payday loans, are valued in annual percentage rates (APR). The APR includes not only the interest applied to the loan, but any additional fees and charges connected with the loan.
This means that penalties for late payments are taken into account as well. And precisely this type of penalties and charges are the reason why recklessly taken payday loans end up being highly expensive and financially devastating for the borrower.
In addition, always be cautious when you stumble onto lenders who promote services such as rapid payday loans online with 0% interest rate. Interest rates and correspondingly, APRs, can be different depending on the repayment term that is most suitable for you. Naturally, the most convenient type of online payday loans for the debtor are those that carry comparatively low interest rate. This means that the loans that carry the shortest repayment deadlines.
Be aware of state regulations on payday loans
When looking for legitimate fast payday loans online, another factor to consider is how your chosen lender fits in your state’s regulations regarding this type of credit.
This is something that could be easily checked. It is also a necessity since the regulations vary greatly from state to state. What is more, they also determine a great number of major factors, such as the amount of money that you can actually borrow, the fees thatlenders are allowed to charge, and even the repayment term limits as well.
Always evaluate the lender’s legitimacy
Last, but not least – do your best to make absolutely sure that the lender you are corresponding with is legit and trustworthy. Don’t jump into loan application with the first online creditor simply because of appealing promises along the lines of “Bad credit is OK” and “loan approval is 100% guaranteed.” Not every lender who claims to provide swift payday loans online is fully honest and you should always keep that in mind.
One of the hallmarks that suggests you have found a reliable lender is if he or she has a Better Business Bureau (BBB) accreditation. BBB is an organization that has been established over 100 years ago and since then, it specializes in identifying dependable and upright businesses.
Another factor that you should necessarily look about is the contact information that the online payday loan lender provides on his website. The internet is an easy place to scam people especially by concealing or counterfeiting contract details. Be sure that the lender you are about to negotiate with can be easily found and doesn’t attempt to hide things such as physical business location, working hours, telephone numbers and email address.
In a few words, applying for quick payday loans online is a tricky business. However, despite some opinions that you can find in mass media, payday loans aren’t a way to get yourself into a never-ending vicious cycle of borrowing and repaying.
At least, not if you have done your homework and carefully considered whether a loan is absolutely necessary in your situation. In that case, the Internet gives you more than enough options for checking, researching, comparing and informing yourself on the great number of online lenders who provide fast payday loans.