Minggu, 30 September 2012

Payday Loans - Are the Payday Loan Alternatives Better or Not?

It is always a good idea to compare all of the available options when you need to make a decision regarding your finances. The payday loans are an obvious solution in case of cash emergencies. However, there are other options that you may want to take into account. Find out more about them and how they compare to one another.

Credit cards are among the main alternatives to payday loans. Their main advantage is that their interest is lower. There are all kinds of promotional credit cards which have zero interest for a set period of time. You will still owe the sum that you borrow, but you will not have to pay interest on it and this is a great benefit. Another good thing about credit cards is that they allow you to pay your debt over time without you getting into more debt.

There is one major disadvantage of credit cards in comparison to payday loans. It is harder for you to get approved for a credit card if you have bad credit and a low credit score. There are some cards designed for subprime borrowers, but they are also not easy to get and are fairly expensive to use. Another drawback of credit cards is that even though the approval may be quite quick, the issuing of the card may take quite some time.

Many credit unions have introduced short-term loans similar to payday loans. The credit union loans are also for fairly small sums and have to be repaid in full on your next pay day. The major difference is that the interest rates are considerably lower. They are not very low actually, but there is a noticeable difference between them and the rates set by payday lenders. This is a superb advantage.

There are disadvantages to credit union loans that you should take into account. Their availability remains limited at least for the time being. They are available only in certain towns and cities and in some cases in certain areas of a single city. In addition, the approval procedure is the same as the one used when an application for a traditional loan is made. This means that there is a high chance of being rejected if you have bad debt reflected in your credit score.

The alternatives to payday loans are not perfect and may not work out for some people. The important thing for you as a borrower is to do some analysis and to choose the best option for you.

Jumat, 14 September 2012

Payday Loans - How to Make a Payday Loan Work Out Best for You

There is no doubt that payday loans are easy and quick to get, but they are also tricky as well. You will certainly have to pay a fairly high interest. You will also have to take into account the risk of getting into great debt. There are ways in which you can avoid all possible issues and make things work in your favor. Use some practical tips on how to take out and manage such loans for achieving financial wellbeing in the short and in the long term.

Shop around for payday loans. Usually, people use such financial products in case of a cash emergency so it is common for potential borrowers to choose the first company and product that they come across. This increases your chances of paying more than the product is worth.

It is super easy to do comparison shopping for payday loans given the technological advancements that we enjoy at present. Use one of the search engines to find a number of lenders with online representation and compare their products. This should not take you more than an hour but can save you a considerable sum of money.

Compare the APRs (annual percentage rates of interest) that come with the different payday loans. The APR shows you how much the borrowing will cost you. The lower it is the better. Sometimes, lenders do not provide the APR but show you the fixed interest sum which you will have to pay on your next pay day. In such cases, you should do the math to get the actual APR. Another thing to keep in mind is that often the APR is different for the different amounts of money that you can borrow. You have to know exactly how much you want to take out so that you can compare interest rates effectively.

Check carefully for any additional fees and compare these as well. You may have to pay service fees in addition to the interest. Some lenders charge application processing fees even though this is rare. You have to know the total fee amount that you will have to pay in case you borrow the money. Add this amount to the interest amount to get the total cost of the loan. You should be able to pay it.

Find out what will happen if you cannot afford to repay your debt. Most companies offering payday loans do not have penalty fees for late payment because they are more than willing to extend your loan. This is a good thing, on one hand, but usually the debt grows considerably and becomes even more difficult to repay. Given this, you must be absolutely certain that you will be able to repay the principal plus interest on your next pay day.

Take payday loans seriously and use them wisely to make the most out of them. Read the agreement presented to you by the lender and make sure that you understand everything written in it before you sign it. You have to know exactly how much you will have to repay on your next pay day.