CAREFULLY REVIEW PAYDAY LOAN LENDERS TERMS AND CONDITIONS
WHEN THERE’S NOT ENOUGH PAYCHECK IN THE MONTH
If you have a hard time making ends meet every month, it is possible that you took a payday loan or are considering this option. In short, you get a payday loan at a loan store, this is not a bank and requires post-dated checks or direct debit agreements as collateral in most cases. Payday loans are usually less than $500 but you will end up paying more than that, these type of loans are known for their high interest rates.
It is important to understand the terms and conditions before you take a payday loan. These establishments have earned a bad reputation because they make it almost impossible for the borrowers to pay them back. This creates a cycle, the stores keep getting money and the person has a debt that keeps getting bigger.
KNOW YOUR PAYDAY LOAN RIGHTS
Go through every detail carefully; know how much you are getting, for how long and at what interest rate. Evaluate if it is really convenient, you may want to visit a different store before making a decision. Also prepare a plan so you can pay the loan back as fast as possible.
KNOW THE COST OF THE LOAN
Payday loans are known for their high interest rates, it could go as high as 400% interest, which can makes it virtually impossible to pay back in a month. By law the interest should be 30%—40% but most places do not follow this rule and offer flat rates. You can get $20 per $100 for 7 days, it does not sound bad but if you are not able to repay, those $20’s multiply. After 21 days you end up paying $160 instead of $120. Keep those numbers in mind before you get a payday loan.
KNOW THE TIMETABLE OF THE LOAN
Time is key when it comes to payday loans, in theory you are borrowing money until your next pay day. The timetable could go from 7 days to 14 on average, this is the time you will need to get your pay from work. Know exactly when you must payback and make a plan so you can meet your commitment.
PAYDAY LOAN STATE RIGHTS
In Australia the Federal Government are looking at creating federal laws to regulate loan stores, they are trying to prevent usury and the predatory lending policy. The high fees make the lending process very profitable, which is why so many loan stores are still in business. People that take a payday loan the first time find it hard to quit after only one loan, chances are that this person will take payday loans for years and their debt will continue to increase dramatically over all that time.
Federal laws are trying to protect impoverished people, they are the main target of the payday loans. People usually take multiple loans in different stores, this way they never break the cycle of debt. Before you take a payday loan, consider your options and organize your monthly budget. Reducing your expenses, getting a part time job on the weekends or selling things that you do not use, could be a better option than taking a loan.