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Payday Loans - The Three Things You Must Know Before You Apply
Tom Rector
December 15, 2011 - Payday loans can help consumers in need of fast cash loans even if they have previous credit problems or current bad credit. These payday loans are typically issued with no credit check and as long as the consumers are over 18 years of age, U.S. citizens and have a valid checking account, the chances for approval are very high. The typical loan averages anywhere from $300 up to $5,000 and the payback terms vary according to the lenders.
As much as these payday loans are issued and do well to service those in need of special funding, there are a few things that consumers do need to be aware of before they apply for this type of cash loan. Many consumers jump into this type of cash advance before they know the full story and select a lender based on advertising instead of good research. By keeping just a few simple things in mind before applying for a cash advance, consumers can protect themselves from potentially getting into a payday loan situation that they may be unhappy with.
1. Check out the potential lender with the Better Business Bureau or the Federal Trade Commission before you apply for a loan. Many lenders already have a high number of complaints filed by consumers with these departments and if they have a history of consumer complaints, the odds are good that you may encounter something to complain about as well. There are a couple of Payday Loan review sites on the Internet that do the leg work for the consumer and help eliminate at least one element of potential danger with payday loans by reviewing only those sites with clear BBB and FTC complaint histories.
2. Know how much you can afford to pay back each week or out of each paycheck before you accept you loan. Consumers may apply for a loan and get accepted by a lender first and then ask about repayment terms available. It is best to get your approval first as that approval will give you more negotiating power with the lender. The only thing that a lender wants more than to get their money back quickly is to get their money back, period. If they approve you, but then offer you payback terms that are beyond your ability to pay, then the loan does neither one of you any good. Starting your loan process with a good budget of repayment in mind will dramatically increase your satisfaction with the cash advance process.
3. Because Payday Loan providers don’t typically perform credit checks before they offer a loan, they also don’t typically report you good payment history to the credit bureaus. If a consumer is in need of positive reporting accounts to help them raise their credit score, they will do better for themselves to get a secured credit card from a bank or credit provider who actually reports to the major credit bureaus than to make payments on a cash advance. Most payday loan applicants are more interested in getting fast cash with no credit check, however some consumers do think about the other aspects and they need to be sure how their wants and needs will be serviced by the cash advance provider that they select.
Complaints lodged against payday loan providers are on the rise and most of the complaints come from the fact that the consumer does not have enough good and accurate information before they get into the loan process and therefore small misunderstandings in terms and policy morph themselves into complaints and look bad for the lender and the consumer alike.
In light of the increasing number of complaints, state and federal agencies have been quick to scrutinize payday loan providers and their practices. If consumers and lenders alike would work to increase a mutual understanding of the business, both parties would be far happier with each cash advance transaction.
If consumers keep these three important things in mind before they apply for a new cash advance or accept an offer from a short-term lender, they will go far to eliminate several potential pitfalls with this type of loan. As stated earlier, these payday loans do serve a good and valuable purpose by providing access to cash for those who would normally be turned down by conventional lenders, however when consumers arm themselves with the proper information before getting into a loan of this type, the will most definitely be better off.
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