There numerous adverts on the television and the internet about payday lenders, it seems too good to be true. You may have heard horror stories about people borrowing money and then getting themselves in to so much debt that they cannot repay it. As with any type of borrowing you have to be careful, it is always going to be a risk and payday loans are no different, the only difference is they are to be used as a short term solution to help you you with your financial trouble. I must stress, you should not use it as a longer term solution to any finical difficulty.
Payday Loans FAQ
What is are payday loans?
A payday loan is a short term solution to if you are a little short of cash at the end of the month. The idea is that you borrow the money you need until your next payday, hence the name payday loans, the usual length of the payday loans is approximately 30 days.
In what circumstance is a payday loan best used?
Well payday loans should not be treated as everyday borrowing but as emergency fund, to only be used as a last resort. Payday loans should not be used to buy anything unnecessary, like a night out. It is always risk borrowing money, so you should try avoid it when you can.
Why such a high APR?
This is because payday loans are intend for short term and lower amounts than the usual personal loan. Also a few payday loans companies do not require a credit check so it can be seen as a rather large risk from their point of view.
How much can I borrow?
This all comes down to the provider, some payday loan providers offer between $80 and a $1000, so check before you borrow.
How do payday loans cost?
Roughly you will pay $25 for every $100 you pay, but this does vary from lender to lender so you need to check with the provider you have chosen to go with.
How do I pay back my payday loan?
Well a few will debit the amount on a certain date from your account, others require you to pay it back by ether cheque or debit card.
Can I pay it back weekly?
This comes down to the provider, some will allow this but the majority prefer you to repay it back in a lump sum.
Will the lender contact my employer?
No, your application is completely confidential and the lender is not legally allowed to pass on any of your details without your connect.
How soon will the money be in my account?
This depends on your lender, some can have the money in your account within 24 hours.
Can I defer payment of the loan for another month?
This is not recommended as payday loans are designed as a short term loan and you may have to pay an even higher rate for the next month. This is at the discretion of the lender so you real need to contact them if you plan on doing this.
Can I have more than one payday loans?
Theoretical it is possible, will the lacks credit checks you can have more than one. I would strongly suggest you do not do this because it is highly risky and you may not be able to pay back the combined debt and the interest that comes with it.
You thing you should not be doing is taking out one payday loan to pay off other payday loans, if you find yourself having to do this you may have wider financial issues and I recommend that you go and see you local financial adviser. There are a few other articles here at the personal finance company that you may find useful when borrowing money. Payday loans are widely available from many different lenders but I recommend that you do your research in to the lender. As it has been know that some loan sharks have posed as payday loans company in order to trap some unsuspecting customer.