Payday loans are the best option for you to solve some of your financial difficulties.Many are thinking that payday loans have very high fees and they prefer to apply to a personal loan from a bank or ask money from their relatives.Maybe they are right but before we discuss about desadvantages and advantages of payday loans let’s explain what is a payday loan and how you can apply for it.
A payday loan is a short term loan, usually 14 days, taken from a lending company place or directly from the Internet.Also you can borrow up to $1500 and you’ll pay fees between $5 and $30 depending on the lender.
Now you’ll say that $30 is a bit to much but think again because when you apply for a payday loan online the lender doesn’t require any documentation like you provide for a personal loan.You just need to provide basic informations about you like name, a bank account, address and also it is important that you have at least 18 years and be an American citizen.So when you apply for a payday loan from a lender which has a $30 fee you need to think that the fee is so high because that lender doesn’t know if you’ll pay everything back on time and he needs to be sure that you’ll meet the deadline and otherwise you’ll pay additional fees.
Another thing that you need to take into account is that you can apply for this kind of loan even if you have a bad credit history so this type of business is offering you the chance to improve your financial situation but just be careful and don’t make any more mistakes.
Now let’s see a comparison between payday loans and some of the alternatives when it comes to APR (Annual Percentage Rate).This is very important because may people think that the APR for payday loans is to high but they think this without knowing that the APR is calculated per year and when you take a payday loan you take it just for a few weeks.Here are a few simple facts:
If you take a payday loan of $100 with a fee of $30 for 2 weeks then the APR is 780%
If you have an $100 Credit Card Balance with $37 late fee then the APR is 965%
$100 Utility Bill with $46 late/reconnect fees = 1,203% APR
$100 Bounced Check with $54 NSF/Merchant fee = 965% APR
So do you still think that the fees for a payday loan are too high?
If you look at the example you’ll see that we have made the APR for a payday loan with a fee of $30 but there are many payday loans providers which are having smaller fees so the APR can be even smaller than that.
The only thing that you must be careful when you apply for a loan is to make sure you’ll have the money to repay because if you’ll extend your loan then additional fees are included and nobody wants that.