A Quick Look at Payday Loans
If you find that you are temporarily out of money you can use a payday loan. A payday loan is a short term loan for a small amount. If you apply online for a payday loan the repayment will usually come out of your account automatically or you will write a check for the amount that the lender will cash on the due date.
You can get your payday loan extended by rolling it over to the next month, but keep in mind that you will incur extra fees and costs.
Payday loans are usually quite expensive as you will pay the annual percentage rate that could be quite costly.
When it comes to a payday loan they have one major disadvantage which is the cost. The fees that are attached to a payday loan are not cheap and they have the potential to add to your financial difficulty. The interest rate on a payday loan is particularly high so you will be adding to your expenses.
If you have an emergency then payday loans are worth considering as you can get some extra cash and quick, but they are just a short term fix.
When you extend a payday loan, you may get yourself in a sticky situation as you will pay more interest and fees.
Banks and Payday Loans
Banks now offer payday loans but these are not much different to the payday loans that you get from other lenders as they are still pricey and risky.
As the bank has access to your account they are able to pull the money out once the payday loan is due. Once they see that you have money they can take it even when you have other bills to pay. If you choose to borrow somewhere else you may have a little more control of how and when the repayment leaves your account.
However, look at the terms your bank is offering as they might be better than other lenders.
There are alternatives to payday loans which are worth considering.
- Create an emergency cash fund in your savings account.
- Build crest so that you are able to borrow from conventional lenders.
- Have an open credit card for emergencies
- Get an unsecured loan from your bank
- Have a look at overdraft protection plans