The instant payday loans are the short term finances, which are particularly designed to assist the individuals in case of exigencies or any kind of unexpected occurrence to ensure that the individual does not face any sort of financial crunch. The payday loans are given in smaller amount with a short repayment period. These loans are also called same day cash loans or cash advance or check loan because they give you some cash to sail through till the next payday sets in.
What are the factors that you must consider while availing payday loans online?
These loans do give a short-term relief to your financial needs, but they have a lot of significant issues concerned with them. Hence, we tell you the factors that you must consider before taking same day cash loans:
- High rate of interest: The instant payday loans come with an exceptionally high rate of interest. There are chances of the customer paying nearly 400% of the interest rate on a loan of say, $100 for a period of 15 days. Such an extortionate rate of interest can land up the customer in a repetitive debt cycle. So, before taking the payday loan, consider the repaying capacity to avoid the consumer debt.
- Reason for availing loan facility: Before applying for payday loans online, check whether you are using the loan amount to make an unexpected purchase or the loan amount is going to be used for the financial crunch you are facing. These loans are unsuited for settling the monthly expenditure and you will end up either defaulting or taking a further credit because of the feature of payday loans no credit check.
- Hidden fees: Similar to the hidden fees of the Bank, the payday loans also comes with the hidden fees. Such fees make the loan even more costly if we consider the principal and the interest amount. So, before taking the payday loans online, make sure to read the terms and conditions of the loan carefully so that your financial obligation is known to you.
- Under strict Regulation: These loans are either banned in certain states or are under strict monitoring of the Government. The legislature is made for limiting the interest rates, hidden charges and other billing practices. Because of the payday loans no credit check, these loans are considered as the source of loans only for those individuals who cannot avail the loans anywhere else because of poor credit history.
- Legal dangers: The payday loan business comes with a lot of loopholes and less of protection for the customers who avail loan through this facility. Also, there are a few payday loan companies who are running full-fledged offices, while most of them are operating through online, thus the chances and risk of scams have increased manifolds.
How does these loan work?
Having told the meaning and consideration of the payday loans, let’s understand how these short term loans actually work:
- The customer pays a fee for availing the loan at a pre-determined rate and the fee usually hovers in the range of $15-$30 for every loan amount of say, $100. The fee may sound reasonable, but considering the short duration of the loan, the fee charges are higher than what is charged on a credit card.
- If on the due date of the loan, you are not in a position to pay the principal and the fee charges, then the customer is provided with the ‘roll over’ facility and is charged with another fee. Thus a vicious circle of customer debt is created and the payday loan companies can keep on earning for an indefinite period.
The Bottom Line
Always remember the thumb rule, there is nothing called easy money. The same day cash loans are instant, but very expensive and can end up in the debt cycle which is very difficult to break. The individuals with limited resources take this facility and end up paying way more than the initial expenses. The next time, the idea of taking payday loans strikes your mind, take a pause and think of the repercussions, before moving further. If you are facing a financial crunch and it is becoming difficult to make the ends meet, considering getting some nifty financial advice from experts instead of heading for the payday loans.