Money Management

How to Effectively Compare Payday Loan Options

How to Effectively Compare Payday Loan Options

. Payday loans often earn a bad rap, but if you compare your payday loan options, you should walk away with a loan that has a decent payback period and a reasonable interest rate. Payday loans are always subject to high interest rates because of their short-term nature. A payday loan is not intended to be paid back slowly, but rather over a period of just weeks. You typically take out a payday loan when you need a small amount of cash to pay off a bill but you know that you will have a paycheck coming in shortly to pay off the loan. Payday loans are intended for emergencies and only when backup funding is on its way. Below, you will find how to effectively compare payday loan options so that you can get the best loan possible when you need it.

Comparison shop for the lowest interest rate

When it comes to payday loans, interest rates are always going to be high. This is pretty much unavoidable because the payday loan is intended to be short-term and paid off quickly. In order for the payday loan company to make money, they charge a premium price. By comparing the interest rates of multiple payday loans, you can find a provider that offers a lower interest rate than the competition. Typical APR’s for payday loans start out around 150% and they can be as high as 500%. The interest that your loan has will depend on the area that you are located in.

Comparison shop to get the longest payback period

The length of your loan is very important when it comes to a payday loans. Payday loans are short-term loans and that means that you have very little time to pay back the money and that is with interest on top. If you aren’t careful, you could get sucked into what is known as the “payday loan trap,” where you are forced to take out another loan in order to pay off the first. The longer your payback period is, the better your chances are to come up with the money. A lengthier payback period may even allow you to spread out your payments toward the loan, which will make it easier to afford.

Find a payday loan provider with flexible terms

This may be difficult or even impossible to find in some areas of the world, but finding a payday loan provider with flexible terms can do wonders for your finances. If you take out a loan and you are suddenly unable to repay it by the date that you originally specified, then having a loan provider that understands this and extends your repayment terms would be ideal. If not, you would likely have to take out a second loan, which would place you in even more debt. Some payday loan providers do have flexible terms, so be sure to shop around until you find one that meets your needs.

Find a payday loan provider with minimal fees

If you are late to make a payment toward your loan, there is usually going to be a fee. Rather than placing a substantial fee on your account and putting you in even more debt, there are some payday loan providers that keep fees to a minimum. While they will still charge you, the charges are significantly less than with other companies. This could actually be what saves you from having to take out more loans, which could jeopardize your financial stability. Remember, every payday loan provider is different and the terms of your loan could vary greatly between different companies. Be sure to comparison shop and get answers to your questions when you are comparing payday loan options.

Author Bio: Nedra Castilla works for www.paydayadvance.org a payday loan information website

Comments (1)

  • It is a good idea to get a loan with a longer payback period. The reason is because you don’t want to put too much pressure on yourself to make the payment when you know that it might be very close.

    Pam

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