3 Things to Consider When Taking Out a Payday Loan

Payday-loan

Whether you have an emergency to finance or you have just moved into a new home and are in need of household appliances now, not in 3 weeks when payday rolls around, a payday loan is there to help many people. You can ensure that you can still get the luxury items that you want to fill your home with that will last for years to come, which will, in the long term, save you money. 

That being said, there are three key things that you should consider before making the decision to take out a loan of this nature.

1) Interest Rates

When you are considering taking on debt of any sort, the first thing that you need to look into is the interest rate offered by the lender. In layman’s terms, this is the amount that you as a borrower will be charged for the money you are borrowing. The interest that you are charged will be paid back on top of the amount that is lent.

money-savings

If you are looking into taking out a payday loan, the interest rate on average will be much higher than that of a loan that you would take out and pay back over a longer period of time. Payday loan lenders on average charge around 1,250% APR. The nature of the short term loan is such that it is designed to be repaid over the course of a month or two. As a result, the amount of interest that you would end up paying might not be such a large sum depending on the amount you borrow.  

In essence, you should be sure that the total amount that you would pay your lender in interest doesn’t vastly outweigh the value of receiving your loan.

2) Fees

Once you have your interest rate figured out, you should inquire about any fees that will be associated with your loan. Common ones to make yourself aware of include late fees for overdue payments and default fees. These amounts will be paid in addition to the interest and will vary from lender to lender.

There are a number of reasons why such fees are allowed to exist. Nevertheless, it is prudent to make sure you have all the information and fine print sorted out before you take the leap and take out a payday loan.

saving-money

3) Is the Juice Worth the Squeeze?

While this might sound like an obvious question, it is important to look at your financial situation from all angles. Is this short term loan something that you are positive can be paid back within a couple of months? Is the loan entirely necessary to make ends meet? Have you used an online broker sight like Cash Lady to make sure you are matched with the right lender for your situation?

Essentially, when it comes to the research you do before taking out a payday loan, you want to be as thorough as possible. Avoid simply clicking on the first lending site that shows up on a search engine. Read real customer reviews and educate yourself before taking on debt of any kind.

Carol
Information sourced by the author for luxuryactivist.com. All content is copyrighted with no reproduction rights available. Images are for illustration purposes only.

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