What are payday loans?

You’re a week away from payday and need money fast. What do you do? Many people turn to payday loans – small, short-term loans that do not require a credit check. These loans offer instant access to emergency money for people who cannot get credit any other way. However, this comes at a high cost. Say you need to borrow $300 for one week. You would write out a post-dated check for that amount plus a finance fee of around $40. The lender would then give you $300 in cash. At the end of the week, you can either repay the lender $340 in cash, or let them deposit your check. If you do not have the money to pay back the loan, you can write another post-dated check, with yet another fee.

The benefits of payday loans

If you do not have access to other types of credit, a payday loan may be a good option in an emergency. If you desperately need the money right then and there, for example, to pay a medical bill or get the car repaired, a payday loan will give you an immediate cash advance. Payday loans do not require a credit check. So if you have no credit history, or have had serious credit problems in the past, this may be your only option.

The drawbacks of payday loans

Payday loans are very expensive. A typical annual percentage rate (APR) on a payday loan is 400%. In some cases, it can be as high as 5,000%. In contrast, the typical APR on a credit card is 12%, and on a standard loan, it’s 7%. The people who turn to payday loans are often the ones who can least afford to pay such extortionate interest.

Payday lenders are not licensed or regulated the same way as banks. Some states do have laws that dictate the interest that can be charged on such loans, but some lenders get around these regulations by operating on the internet or by partnering with banks in other states.

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Should I get a payday loan?

If you’re thinking of getting a payday loan, ask yourself if you have any other credit options. If you do, chances are that the other options will be a better value. If you need the money to pay a bill, see if you can negotiate a mutually-acceptable payment plan with the creditor. If the creditor refuses to budge, a late fee on the bill may still be cheaper than the charges that you will have to pay on the loan. If you have a credit card, you may be able to get a cash advance on it. If you do not have a credit card, but do have a bank account, check with the bank whether or not you have an overdraft facility on that account. The interest on the overdraft will be significantly lower than on a payday loan. If you’ve exhausted all your other options, shop around for a trustworthy lender with the most reasonable interest rate. Do not borrow more than you need and pay it back as soon as you can.

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Payday loan companies

Best Cash Advance
888-688-9300

Cash Advance Network
800-992-9200

Cash Central
800-460-4305

Fast Cash Online
888-610-3278

Rapid Wire Cash
800-540-0213

USA Cash Service
887-309-2274

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