Though payday loan help may seem like the answer to your prayers when bills are due and your bank account is empty, there are several sobering facts to consider:
- Payday loans are an expensive form of credit. According to the Consumer Financial Protection Bureau, fees for a typical payday loan average 10 to 30 dollars per every 100 dollars borrowed. For an average two-week payday loan, you can expect to pay an annual percentage rate of nearly 400 percent. This is a much higher APR than even the most expensive of credit cards charge, which generally top out at 30 percent.
- Payday loan terms tend to be extremely short. Loans are generally set up to correspond with your next paycheck, which means the repayment period is usually one to two weeks in length. Chances are this period is too brief to allow you to solve your cash shortfall.
- Because a week or two often isn’t enough time to resolve cash flow problems, most payday loans are rolled over. Rollovers involve fees that add significantly to the cost of your loan.
- You must disclose sensitive account information. The payday loan lender generally requires your checking account information to deposit and withdraw funds. Providing this information leaves you vulnerable to even more financial problems should your information be compromised.
- The Federal Truth in Lending Act, administered by the Federal Trade Commission, regulates payday loans just like any other type of loan. That means that lenders must disclose the true cost of the loan prior to issuing the loan. This includes disclosure — in writing, of the finance charge, annual percentage rate (APR) and the length of the loan.
- Regulations for payday loan help vary from state to state, which means fees also vary. Familiarize yourself with the rules in your state BEFORE taking out a loan.
- If you fail to pay off your payday loan, your credit may be negatively affected.
If You MUST Take a Payday Loan
Payday loans should be an absolute last resort for dealing with financial emergencies. Oftentimes, a personal loan from a lender other than a payday lender is your best bet. If you find that a payday loan is truly your only option for raising cash quickly, protect yourself and your finances by keeping a few things in mind. Don’t sign on with the first loan company you find. Compare interest rates/fees and loan terms. Check for online reviews and any complaints regarding the company you are considering. Avoid getting stuck in an endless debt cycle by borrowing the least amount of money possible and paying the loan off on time.
What Do You Do When Your Loans Get Out of Hand?
Call us at Exit Payday Loans so we can take a look at your situation and find which of our solutions are right for you. Don’t wait another minute. As you miss your payday loan payments your interest could reach over 400% for every rollover. We have the tools to help you with your financial crisis and get you toward the financial stability you have been wishing for.