Payday Loans
You've probably seen the ads for payday loans. They may sound too good to
be true. These companies make "payday loans," "check loans," or "payroll
advance loans." These are all just different ways of saying the same
thing, a certain type of loan transaction. But before considering a
"payday loan," learn the facts. Payday loans are really not a solution for
long term monetary problems. They can, however, be a good short term
solution depending on your situation. Payday loans may be useful for
temporary cash flow problems or a financial emergency when money is needed
on a short-term basis. You should plan to pay the loan in full when it
matures.
It's important to pay attention to the interest rate on payday loans
before you sign up for one. The rate can be very high and increase every
time you refinance. You should definitely avoid considering multiple
payday loans; this can just make matters much worse. It can make it
impossible to catch up. So before taking a payday loan, it.s important to
know how they work.
To take out a payday loan, you first fill out an application and
provide the lender with information such as paycheck stubs and a photo ID.
Then you sign a payday loan agreement, write a postdated check to the
lender and receive the money. Your check is then held until the loan
payment is due, usually in about two weeks. The payday loan lender then
deposits your check and unless the check has been replaced you have
already repaid the loan. The loan agreement that you sign is a legal
document that obligates you to repay the loan. It also outlines a lot of
important information like amount financed, the finance charge, annual
percentage rate, and the total number of payments.
The loan agreement obligates you to repay the loan. Read the contract
carefully before signing it. Keep a copy for your records. Make sure there
are sufficient funds in the checking account on the due date of the loan
so your check clears when the lender deposits it. If you do not repay the
loan, the lender can pursue a money judgment against you for the face
amount of the check, as well as court costs, any late charges, interest,
and NSF fees. Once a legal judgment is obtained, a lender can garnish your
wages. Some lenders also list past due accounts with the credit bureau,
which can affect your ability to get credit in the future.
