Unexpected financial emergencies can be unsettling, but they don’t have to ruin your week. Thanks to the quick and easy funding of instant payday loans, you may even be able to solve your financial crisis on your lunch break. Payday loans are helpful solutions for borrowers with less-than-perfect credit or those who don’t want to jump through the hoops of a traditional bank loan, but before you get a payday loan, you should read on for an in-depth review of how these loans work and whether they are right for your situation.
What are Payday Loans?
Payday loans are small principal, high-interest loans that are typically due to be repaid within a few weeks. These loans are structured for people who need quick, 24 hr payday loans Cuyahoga Falls easy cash to hold them over “until payday”. Payday lenders make it easy to get approved and receive your funds, but they typically charge high interest rates for the convenience and lower credit standards.
How do Payday Loans work?
Once you are approved for a payday loan, your lender will ask you to complete some basic paperwork that can usually be completed online from the convenience of your home. You’ll also need to share your bank account information so you can receive your funds.
Your loan repayment terms will vary by lender and loan amount, but some payday lenders will expect the entire balance of the loan with interest repaid within 2-4 weeks. For example, if you borrowed $300, your lender might set up an auto draft from your checking account to repay $340 two weeks later (the original principal plus the interest and fees). For larger loan amounts, your lender may arrange automatic payments every two weeks until the loan is repaid. In some cases, you may be able to mail in your payments, but these arrangements are the exception, not the standard.
Fees to Get Loans from Payday Loan Online Lenders
When shopping for payday loans, you may see several types of fees that are applied on top of the principal loan amount. Expect to pay a small application fee, especially if your lender requires a background check. Most lenders also charge origination fees, which can be a flat fee or a percentage of the requested loan amount, to cover the administration costs of processing and maintaining your loan.
Some lenders also have fees that are avoidable and only apply in certain situations. For example, if you miss a loan payment, you may be charged a late fee. Some lenders also charge pre-payment fees if you pay your loan off early, while others may charge renewal fees if you decide to renew, or take your loan out again, at the end of a payment cycle. These fees add to your overall cost of borrowing money and should be avoided whenever possible, so make sure you have a plan for repaying the loan and sticking to the repayment terms as closely as possible.
Steps to take before applying for Payday Loans
Payday loans are popular because they generally are simple to get and provide fast funding. Unfortunately, this ease of access has caused some negative stigma around payday loans, especially when borrowers don’t do proper research first. To make sure this type of loan is a good fit, you should always do the following before applying:
- Choose the right type of loan – Although instant payday loans are a very specific type of financial product, some companies offer products called “payday loans” that don’t truly fit the definition. For example, some companies may ask you to provide collateral to secure the loan, which puts your personal property at risk. Know the specifics of your loan before applying.