Here Is A Brief Explanation About What Payday Loans Are
Payday loans are loans that a person can take for a short period of time
. Such loans are normally taken by people that need some extra cash with which to tide over an immediate financial cash crunch situation. However, before applying for such loans, it is important to understand what they are and how best you can get them. You should be aware of the costs involved and also any risk factors.
Payday loans are as mentioned small amounts of money that you can borrow to help you address a situation in which you need some money immediately. These loans are normally given to you for a period of about two weeks and the amount of money lent to you is also a small sum not exceeding a few hundred dollars.
In order to avail of such loans, it is important that you give the lender a check for the amount of money that you are borrowing plus their fee amount. Mostly, the lender will require that you leave this check with them and they will then cash the check when you are ready to pay back the loan.
However, failure to repay back the loan when it becomes due means that even though you can extend the term of the loan, the lender will then start adding their fees that will accumulate till such time as the entire due amount is paid off.
Another aspect to such borrowings is that they tend to be expensive. This is because you will need to pay the APR (annual percentage rate) which can be a few hundred percent. An example of this can be seen in the fact that for a hundred dollar loan the APR may work out to be twenty dollars.
Besides the high costs involved, such borrowings can also throw up a few pitfalls which can upset your plans. One such pitfall is that the money you get is never enough to solve any real financial problems. In fact, in some cases, such borrowed monies can even exacerbate your existing financial situation.
The best way to deal with payday loans is to only use them once or twice and that too only if you need some cash with which to tide over a rough patch. For example, if you need to pay for emergency repair works then taking this kind of loan can be useful.
It is never a good idea to use these borrowings as any kind of long term solution as they will then work against you.
by: Lance Thorington
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