How to Choose a Payday Loan Lender
When money is tight and unforeseen expenses occur, many people turn to payday loans to help them through their temporary financial bind.
A payday loan serves as a short-term loan, with the expectation that it will be repaid in 14 to 31 days. Just like choosing a bank to secure a home loan, it is important to do your research about potential payday loan lenders before obtaining a payday loan.
Not All Payday Loan Lenders are the Same
Each payday loan store is unique - each is owned by different companies and has unique policies, rules regarding credit, loan fees and repayment schedules.
There are traditional brick-and-mortar payday loan stores, and there are stores located on the Internet. Additionally, the types of loans provides by these stores can vary.
Some common types of payday loans available include:
- Traditional Payday Loans
- Online Payday Loans
- No-Fax Payday Loans
- Instant Payday Loans
- "Bad Credit" Payday Loans
- "No Credit Check" Payday Loans
- Payday Loans for Military Personnel
- 24-Hour Payday Loans
- 30-Day, or Long-Term, Payday Loans
The Importance of Shopping Around
When it comes to selecting a payday loan lender, your best bet is to shop around first. Chances are, you will be able to find lenders with different rates, fees, loan durations, term structures and loan amounts.
When choosing a payday loan store, there are factors that should be compared, including a store's interest rates or finance charges, the maximum amount provided for a loan, loan repayment terms, the convenience of the lender and the lender's qualification standards.
Assessed Finance Charges:
Finance charges are the fees assessed by the payday loan store. These fees are often determined based on the total amount of the loan. While many payday loan stores will refer to these fees as finance charges, they really are the annual percentage rate, or APR, of the loan. The lower the APR, the less interest you will pay on your loan.
Maximum Loan Allotment:
While the most common payday loan amount is $500, the amount offered by an individual payday loan store can vary widely. When shopping for a payday loan store, you should consider the size of the loan that you need - this point will make a difference in which store you choose.
Loan Repayment Terms:
The repayment terms of a payday loan outline when and how a payday loan needs to be repaid. Some payday loans stores have firm due dates at which time the entire loan would need to be repaid. However, many payday loan stores do offer the option to extend the length of the loan for an additional fee.
Convenience of the Lender:
One of the benefits of payday loans is their convenience. A physical payday loan store might work for you, but some people enjoy the added convenience of online payday loans. Typically, you will need to supply your bank account information, and the payday loan lender then deposits the loan directly into your account.
Qualification Standards for Borrowers:
While a payday loan might be easier to secure than a bank loan, you do still need to qualify. When shopping for a payday loan lender, you should review the lender's qualification requirements for obtaining a loan. You might find that you do not meet all of the necessary qualifications.
