There are many types of loans. Some loans require your greater understanding to know its category. But others like payday loans, which are generally small loans, suggest the meaning of its type by its mere name; they are designed to tide employees over until their next payday. Fees coupled with payday loan depend upon its size of borrowing and your credit history. The fund for this short-term loan is available within 24 hours and deposited into your bank account directly or provided in cash. But if your agreed repayment period is over, the entire sum of this small loan is taken from your bank account along with the lenders service fees.
Eligibility Criteria For Payday Loans
Payday loans have such low eligibility criteria that even a customer with county count judgments (CCJs) or bankruptcy will not have problems. You can expect a charge of around $25 per $100 borrowed as fees by some firms. But mind you, if you fail to repay the loan on time, additional interest might be charged.
Despite these benefits, a payday loan might be a very expensive form of borrowing, compared to credit cards, where on $350 borrowed for a month, you pay an interest of only around $8 and nothing the next month if you clear your card in full. But a payday loan might charge you a fee of $87.50, a staggering difference.
Payday Loans Without Interest For anyone opting for a loan for the first time, getting a little anxious is normal. The most common doubt a first time loan applier come across is whether they will get the cash before they earn it.
It is their responsibility to check or else they might land up in trouble. So it’s best to start with a small loan amount. So, a first time borrower should find a lender offering an interest free loan. In this case, you pay back exactly the same amount you borrowed and nothing more. You become debt free as soon as you get your next paycheck.
Alternatives To Payday Loans
You should consider a few things before opting for a payday loan, like when do you want the loan, the APR (annual percentage rate), is it suitable etc. In fact, you can opt for a small loan from your credit union or small loan company, or you can ask for an advance payment from your boss, family or friends.
Comparing the APR and the finance charges including loan fees, interest and credit costs is essential to choose the loan with the lowest cost. Also clear doubts regarding late charges, finance charges or interest rates.
To pay off the payday loan in time, avoid being extravagant. Keep a check on your daily and monthly expenditure; don’t spend money on unnecessary things.
Try to save even small amounts and stop borrowing, not even a single penny.
Payday loans aren’t as big as personal or home loans.
But these small loans are easily returnable and a simple way of getting cash in advance. You get the required amount even without going through a credit check or waiting for approval on your small cash loan.