A payday loan is a quick solution that can make your life easier, when you encounter an unexpected financial emergency. Basically, when you use a payday loan direct, you borrow money for a short period of time (usually for a couple of weeks, or until your next pay day – hence the name for this type of credit), with a relatively high interest rate.
Advantages of Taking Payday Loan Direct
Payday loans have become increasingly popular, because they insure very quick access to funds. Many lenders provide instant acceptance, once you prove you can comply with their requirements, and deposit the cash in your bank account within 24 or 48 hours of the application. This can be very important, when you have an unforeseen situation, such as a medical emergency, and you have to cover a lot of expenses within a few days.
You can apply for a payday loan within minutes, by phone or online – so they’re very convenient for most people. You’ll have to provide some personal details, including proof of employment for the past months so the loans with no credit check lender knows that there will be a next payday for you), and your bank account. (Some lenders may not even require a bank account, and will provide a personal check instead.) The lenders will not check your credit score, so payday loans are a great short-term solution for people with poor credit history.
The First Things to Check when Taking Payday Loan Direct
If you’re interested in taking a payday loan, the very first thing you need to do is verify if it’s available in your area, and which are the legal terms for it. Payday loans are illegal in several states (including Georgia, Maine, New Jersey, and New Hampshire), and quite heavily regulated in most other states, in order to prevent loan sharks from taking advantage of you.
Read up on your local regulations, and check if the company you’ve chosen complies with them. If you find that the lender doesn’t follow the legislation 100%, or tries to use some loopholes in order to extract more money from you, then run away as fast as you can, and look for a different company. There are many legitimate, honest lenders on the market, so there’s no need to take any risks by borrowing from a company with obviously shady business practices.
Make sure all the terms are clearly spelled out: when you receive the money, what’s the interest rate, what’s the exact date when you have to repay the loan, and which are the additional fees or commissions deducted by the company. Ask all the questions you may have, until you’re absolutely certain you’ve understood everything. If the company’s representative is reluctant to answer your questions, then, once again, move on and find a different lender.
How Much Should You Worry about the Interest Rate?
Since the payday loan is not secured (meaning, you don’t use any of your goods as warranties), the lenders charge higher interest rates, to cover their own risks. The interest rate determines how much the loan actually costs. You have to know, from the very beginning, that it will be a high interest rate, and may reach 700%-1,000% annual percentage rate. That doesn’t mean you’ll have to repay the loan a thousand times over, since you’re not taking it for an entire year, just for a couple of weeks. Therefore, you can expect to pay around $15-20 for each $100 borrowed, depending on the terms of your chosen lender.
Last but not least, there’s a very important aspect to be considered: payday loans are extremely useful, under the right circumstances, but can be quite damaging, if you lose control over them. If you find yourself constantly taking personal loans for bad credit in order to make the ends meet, then you should reconsider your options, and find an alternative source of financing, since frequent payday loans are a huge source of additional expenses. But if you need quick cash once, you shouldn’t be afraid to apply, you’ll find many reliable, friendly, and honest lenders in your area.