Why we should be careful with payday loans?
It is told that if you take a payday loan, a payday lender does not require any documents to obtain a loan. In fact, before you are given a payday loan, advance companies have to make sure that you'll be able to pay it back. It means that payday lenders must be sure that you get enough money each month to pay for a loan on time.
Also, payday companies must explain all the features of payday loans. Lenders should mention: how much you will need to pay, what happens if you do not repay the loan on time, how much there is an interest rate and that this type of loan is not suitable for long-term borrowing.
Typically, consumers have one month to repay their loan plus interest, which will be compound to you.
The most common way to pay the payday loan back is to withdraw the amount from bank account on the maturity date. If you don’t have enough money on your bank account, the lender may ask for a half or part of the amount. And of course, late payment charge will be added to your debt.
In case you have problems with the payday loan repayment, the lender may allow you to repay it later. However, the interest rate will be increasing until you repay the loan. Beware of extending payday loans, because you will pay a lot for various types of expenses.
One should know his rights before taking out payday loans.
It is well-known that payday loans are more expensive than other types of credit. Especially, if payday loans are not controlled by authority.
Payday companies may offer you to lend a payday loan in the form of stored-value card. When borrower activate or use the card, additional fees are charged. That can make payday loan more costly.
If you decide to take out a payday loan, it makes sense to look through the law that gives you certain rights. Each region has its limitations, but they vary from state to state. Somewhere they are installed and somewhere they are not. Pay your attention to the following points: the maximum value of loans; the maximum penalty that can be charged if you do not repay the loan on time and the period during which you can cancel the decision of taking the loan without explanation and payment of any fees.
You have the right to know about all the features of the loan. Do not be afraid of asking details which you are interested in. Payday lenders have no right to hide any information from you, as your choice to take the payday loan must be aware.
One of the rules that lenders can not violate in many districts is that they can’t transfer money directly to the payday company. If a company asks you to sign a contract to allow this process contact the authorities for the protection of consumer rights.