Payday loans are of small amounts normally and are taken to deal with some sudden crisis till your next salary. These have a high rate of interest and the prices of these loans tend to be quite high.
Payday loans are quite a popular choice for quick money and people take about five to six of such loans every year.
The reason for the popularity of these loans is that the funds are directed to your bank account the moment you apply for a payday loan. Even if you have a bad credit history, it is not a problem.
You do not have to pay back this loan on the due date. All you need to make sure is that you have a sufficient amount in your bank account so that you can cover both the loan amount and the interest amount which the lender will withdraw from your account automatically on the repayment date.
Usually, the loan amount and the interest have to be paid within a month. Some of the lenders will allow you to select a repayment schedule. Sometimes the option of continuous repayment is offered by some lenders where you are given the authority to make repeated attempts to withdraw the full or partial amount due from your bank account after the pay by date.
When is taking a Payday loan right?
Taking a payday loan shall make sense only if you are able to pay it back in the agreed repayment date. Payday loans are quite expensive once the repayment date has gone by.
The lenders may provide you to rollover the loan till next month or more but that is only a trap to get you to pay more than required.
A wise creditor would freeze the interest and charges to not more than two dates from the last repayment date.
Choosing a Payday Lender:
While selecting a payday lender, check among various lenders in order to get the best interest rate. Do not go for those lenders who offer you with deferrals. Also, never take a loan to repay another.
See if the lender is registered with a trade body as trade bodies have charters that keep their members stick to the rules. These charters deal with the financial difficulty cases with positivity and sympathy. Terms and conditions have to be taken into account as well.
Usually, payday loans have to be paid back within 15-90 days. So go for the company whose loan repayment method you are comfortable with.
According to a report, millennials are more expected to avail of payday loans as they have poor credit records. The high-interest rate makes these loans expensive which makes these loans costly thus adding to their poor credit records.
Due to this reason affordable finance options are not within easy access as the financial institutions that are giving out these loans take a background check and the credit record of their customers or prospective customers before giving out loans. The ease that payday loans offer has made it a popular choice among millennials.