Online PayDay Loans: How to Gain an Advantage over Lenders
Written by: Joel Walsh
When you need money today, and not just a week from today, online payday loans can be a salvation. But for many people, these loans, also called payday advances or sometimes just cash advances, have become a nightmare. Here's the good and the bad of getting an online payday loan:
Good: applying for a payday advance or other cash loan online rarely requires a credit check. There's also virtually no waiting to get cash, and no collateral, down payments, or paperwork headaches required.
Bad: online payday loans' interest is close to or beyond outrageous, and the true cost is often hidden in the language of the agreement. Some payday loans have charged the equivalent of 600% annual interest!
Really bad: some online payday loan lenders are not trustworthy. In some cases, lenders have made unjustified charges to clients' bank accounts. Just remember: they can take money out of your account just as easily as they put it in. Anyone can open a website, so be sure to check out the reputation of an online payday loan lender.
Online Payday Cash Advances: Tricks of the Trade
As with everything else in life that involves money, if you don't want to get cheated on your online payday advance, you had better know everything you need to know before applying. Here are some dangers to watch out for:
Interest and fees. Hit the "back" button when you get to websites that don't tell you the interest rate and all fees, including late and penalty fees, or try to hide this information. Legally, all payday advance lenders are required to provide this information.
Expensive no-interest loans. Some online payday loan companies offer no-interest loans for first-time borrowers. These really can be great, but beware: oftentimes these loans stop being free if you pay even a day late.
Long-term short-term loans. Payday loans are meant to be short term--a couple of weeks at most. But many lenders will be only too happy to let you stretch out your loan's payback date, since it means they can keep charging interest. Make sure you know exactly how much a late repayment will cost you before accepting this kind of arrangement.
Beating Online Payday Loan Lenders at Their Own Game: Tips
Take advantage of no-interest payday loans for new customers, just as long as you are absolutely sure you can pay them back on time or they'll go from free to expensive. After all, the biggest risk for any kind of cash advances are the enormous fees if you don't pay on time. If you can avoid paying interest, your problems are mostly solved.
Make sure your online payday cash advance or loan lender is legit. Check to see whether the lender is a member of the Better Business Bureau--the site will display the logo prominently if the business is a member.
Before you get your payday advance, create a quick budget for how you are going to pay the loan when it is due. Take into account any additional bills or expenses that will come up between now and payback day-and between payback day and your next pay check.
Mark the payback due date on your calendar, your computer at home, your computer at work, your cellphone, your refrigerator magnets--you get the idea. Online payday loans only become risky and expensive when you don't pay on time.
Compare lenders' annual interest rates and fees. Make sure you know the exact cost of repaying the loan so you can make an accurate comparison.
You have to do your research if you want to get a good payday loan, but thanks to the internet, it's easy. Here are some websites to start researching online payday loans (links to websites being promoted):
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