Sunday, September 15, 2013
Payday Loans are very short term loans intended to give you a quick cash injection in an emergency. They are literally a loan that you have to pay back on your next payday. For that reason, they are always for relatively small amounts of cash and for very short periods of time. The cost of a payday loan is normally a fixed fee, which looks fairly reasonable on the face of it, but if you do not pay the loan back on time as agreed, additional charges can soon mount up and you can find yourself owing more in interest than you originally borrowed. Payday Loans are designed for very short term needs, and if there is any chance that may need the money for longer, you should consider alternative means of borrowing. The charges may not be large amounts of money, but as a proportion of the amount being borrowed they are substantial. If you look at the charges in interest rate terms they are extremely high, often over 1,000%. In the US the charges are sometimes governed by local state laws, so cannot be above a certain amount. Failure to pay back a payday loan on time can lead to hefty penalty charges, which for some people can mean getting into a cycle of increasing debt that is hard to break out of. What will typically happen is that if you take out a payday loan and then find that can’t pay it off on the due date, you must inform the loan company in advance and arrange new repayment terms. This is known as refinancing or extending the loan and will lead to a new repayment plan which will include additional fees. Different payday loan companies will have different arrangements and charges for extending loans, so it is worth checking all this out before you take out a loan. Some companies have truly extortionate fees, so you do need to be clear about what all the charges are before agreeing to a loan. If you do find that you are not going to be able to keep to the agreed repayment date, the main thing is to be sure to let the loan company know at least a full day before your loan due date, and preferably longer. If you fail to notify the loan company in advance that you are not going to be able to meet the payment, your loan will be in default, which means the loan is immediately due for repayment and the consequences and penalty charges can be much more serious. Payday loans can be useful in the right circumstances, but the key is not to use them to deal with serious debt, and not to use them regularly. They should be for unexpected emergencies only, and even then only if you are sure you can pay them off in full when you get paid. If you do have serious debt problems, you will be better off trying to tackle the whole problem by negotiating new repayment arrangements with all of your creditors. Free advice is available online on how to do this.
The UK payday loan market is a free for-all as lenders are able to charge extortionate rates without harsher industry regulations. A damning debt management report from the Business, Innovation and Skills Committee (BISC) raised concerns over the wild west' playing field for payday loan lenders. The controversial loans have left millions in a debt hell' as many struggle to make the high interest repayments and are at risk of spiraling further into debt. For the worst hit victims of payday loans, their huge debt problems have seen their homes repossessed. The MP's report revealed the shocking ways in which payday loans have affected people's lives. The manager of one debt solution firm reported that he had seen cases where people had an excess of 20 payday loans. The loans are typically designed to offer consumers a financial crutch until their next payday; however, consumers are left crippled by the sky-high interest rates of up to 16,000%. One personal finance expert, Martin Lewis from Moneysavingexpert, told BISC that the payday loan market in the UK was "A crock of gold at the end of the rainbow." This is because such payday lenders "have been shut down all over the world." He claimed that the problem is "only going to get worse unless there is some form of radical and quick intervention." Recently, the Office of Fair Trading revoked the license of one payday firm, Yes Loans, for poor practices. Sarah Brooks, Director of Financial Services at Consumer Focus, commented: We must not tolerate companies who use misleading sales practices to leech more money from cash-strapped consumers. The OFT has sent a very welcome message - that firms have to treat their customers fairly from the start." Whilst the OFT and the government are taking action against payday lenders, a number of cash-strapped Brits are still turning to them for quick fixes to their debt problems.
The best things in life come in free package and this is certainly germane to people who have been experiencing critical monetary situation. You might have seen all the banner advertisements on television and internet regarding payday loans yet, some people have not encounter the existence of free payday loan. Yes, there are free cash advances that you can acquire only that this is not applicable for the rest of your loans in the future. Although, this is meant for beginner loaners and those with bad credit standing, it still is something that people can turn to in times of need. Free payday loan is only free for your first loaned amount that is no more than $500 dollars. Once you’ve already acquired your very first loan, the next one will definitely be charged. As you see, this type of loan will only provide you with no hassles on your first credit regardless of your credit standing. This might pose a great advantage to those people who have been weary and anxious of a continuous declination of loans applied. This also becomes a bigger advantage for loan financiers as people will be enticed to acquire more than two loans and the process of debt and loaning continues in succession. Through this, the company will be able to profit on finance charges and interest fees should there be cases of delayed payments. With this chain of circumstances, it only entails that both parties can gain more than less with the entire process. For lending investors, this serves as a marketing strategy in luring possible clienteles with a selling point of providing free loans. On the other hand, clients will be more than willing to get another loan after the first one thus, immediately become loyal debtors of the company. Now this truly served the purpose and a lot of companies have been formulating this free payday loan for the reason of getting more application in a day therefore, more revenues for the company. Applying for this loan only necessitates someone of legal age with more than three months of tenure in his recent company. You also need to have an active account in the bank as this will be a way for you to get your instant cash. Lending investors would generally deposit your loaned amount through your savings or checking account so you better have one. Furthermore, availing free payday loan also comes with higher interest rates. Your first one might be free yet, your succeeding loans can amount of as much as 30% of interest charges. Therefore, you need to mull over if this kind of loan is what you really need. With an interest rate of close to what you can avail, this set as one of the major setbacks of free cash advances. However, if the situation really calls for an immediate solution then free loans might definitely pose a good option. As a final point, keep in mind that these loans are just minutes away to be completed yet, the entire repayment terms would take you not minutes but months to repay, so you better be a wise debtor.
Very often there are times when we need payday loans; well, they aren’t all that bad. But, just like everything else these loans have both positives and negatives as well. You don’t need to worry about payday loans a lot as they’re really simple to get as long as you’ve got no bad record in the past. You would need to find a good lender Now that you’ve decided that you need a payday loan, it would be advisable that you go through all your options and make sure that you find a lender that would offer you a loan based on your personal situation. However, if you do happen to go to a heartless lender the entire scenario would change. A late instalment by even a day or two would bring out the worst in them. Therefore, you need to make sure that you’re getting a loan from a trustable and considerate lender. They’re only a last option Well, payday loans shouldn’t be something that you take up often. Make sure that you only apply for them when you really need them. The cash that you get here would have to be returned almost immediately, that is the next time you get your salary and hence it wouldn’t be wise to consider them as long term loans as the interest that you would have to pay in such cases would far exceed loans from banks. You need to give out information No one likes to give out personal information to a complete stranger right? However, when you apply for a payday loan this is what you would definitely have to do. First and foremost you’re going to need to give away your address, phone number as well as the number of your office i.e. your employer. In some cases the lender would also need you to provide references other than your employer and hence a few of your closest friends or family details would have to be given away too. Payday loans – direct deposit Well, all isn’t bad when it comes to payday loans. You would be able to receive the cash directly into your account via a wire transfer usually within a day. When you do this the risk of losing cash is reduced and hence it’s the safest way to get the money delivered to you. Therefore, we’ve seen that payday loans are a huge help; however, you may need to compromise a few personal details in order to get them. Hence, there are both pros and cons when it comes to these services. But, you’d have to decide if you want one or not based on your personal situation.