If you need money fast, a payday loan rated is your best bet. But before you borrow that cash, know that there are many things you should consider before signing on the dotted line. Here’s what you need to know about them and how they work. 

Payday Loans Are Not a Cure-All for Your Money Problems 

Payday loans rated are not a cure-all for your money problems, but they can help you solve short-term financial crises when other options aren’t available or practical. If you have an emergency situation where you simply need some extra cash, then they’re a good solution. Even though these loans carry high interest rates and very long repayment periods, if you need to borrow $1,000 right now, it’s worth considering. 

They’re not a great option for people who want to pay off their debt quickly, either. The average payday loan has a term of three months, which means if you take out a loan with a typical APR of 400%, you’ll be paying back over $400 in interest every month. That isn’t really going to fix your finances. 

It’s also important to keep in mind that you only get one chance to make a good impression. Once you’ve borrowed from a lender, you have no way of getting your money back without incurring additional fees. This makes the risk of borrowing higher than it needs to be, because you may end up having to spend more money than you ever intended to just repay the loan and move on. 

What Is a Payday Loan? 

A payday loan is a short-term loan designed for emergencies. It will cover all of your expenses until you receive your next paycheck. The money comes directly out of your next check, so you shouldn’t have any trouble getting the funds you need. 

You can use the money for just about anything, although most borrowers use them to cover expenses like groceries, gas, and medical bills. They’re often used for car repairs as well, since they won’t cost you much beyond the amount you borrowed. 

Most lenders require you to provide proof of income to qualify for a payday loan. This is typically through your payroll information or bank account statements showing a consistent source of income. Some lenders also ask for copies of your previous tax returns. 

The good news is that this process is usually straightforward and easy to complete. Most banks or credit unions have online applications that allow you to submit your documents and receive approval in minutes. 

How Do Payday Loans Work? 

When you apply for a payday loan, the lender will ask you for at least two weeks worth of records, including pay stubs, bank statements, and any other documentation proving that you have steady income. Depending on whether you’re applying at the bank or a storefront location, the process might be different, but once you’ve provided that information, you can expect to see your loan approved within hours. 

Once you’ve received the necessary paperwork, you just fill it out and fax it in to the lender. They will then verify everything and deposit the requested amount into your checking account. You can then stop worrying about money for a few days while you wait for your next paycheck. You can always borrow more if you need more cash, but it’s better to save it than to waste it. 

Where Can I Get a Payday Loan? 

Lenders of all kinds operate in every community across America, so don’t worry about being unable to find a payday loan near you. A quick Internet search will turn up hundreds of locations near you ready to give you an immediate loan. 

In addition to brick-and-mortar storefronts, you can also go online to apply for a loan. Many lenders even offer 24/7 customer service, so you can call whenever you need assistance. There’s no reason to wait around until payday to borrow money when you can apply online first thing in the morning. 

Can I Refinance My Payday Loan? 

No. When you sign up for a new payday loan, you agree to a set repayment period that begins at the time you sign. If you think you’ll be able to pay back the loan by the deadline, then you should do nothing else until your next paycheck arrives. 

However, if you plan on extending the length of your loan, you can refinance the entire balance at a lower rate. Unfortunately, that means you’ll be repaying your current loan for longer, adding thousands of dollars in interest to the total amount you owe. 

This will likely result in an even larger loan that you will struggle to repay. Instead, try taking out a shorter term loan that gives you more flexibility. 

What Does a Payday Loan Cost? 

The cost of a payday loan varies widely depending on the type of lender you choose. Some places charge as little as $15 per $100 borrowed, while others charge over 300% of the amount you borrowed. 

The key here is that the actual cost of a payday loan depends entirely on the terms you agreed to when you signed up. If you took out a loan with a fixed payment schedule of $50 per $100 borrowed, then you’ll be charged $150 for every $100 you borrowed. On the other hand, if you signed up for a shorter term and agreed to a variable payment schedule, you could end up paying more than $300 each month. 

There’s no way to predict what you’ll actually pay when you borrow money unless you know exactly what your monthly payments will be under the terms of your agreement. In general, however, you can expect to pay between 50% and 200% more than you originally borrowed. 

Should I Avoid Payday Loans? 

Despite the obvious risks involved, payday loans are still a viable form of financing. In fact, many people prefer payday loans to conventional forms of credit because of the minimal paperwork required and the speed with which they can be issued. 

While it’s certainly true that payday loans will leave you with a mountain of debt in the future, it is possible to avoid this problem altogether. Just think carefully before borrowing large sums of money and consider all of your potential options before making a decision. 

If you want to learn more about payday lending and how to manage your debt, visit our guide to managing your debt responsibly. It covers everything from how to find a reputable lender to how to negotiate better deals with creditors.

Conclusion

Payday is a good option to pay the bills and many such money related stuffs but they are not a solution for all as if at all your job goes away or your business gets closed then the more burdensome and high rate of interest will bring even more nightmarish situation to you so be careful when you deal with payday.