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 Payday Loan Articles


Are you currently suffering from financial distress and seeking immediate short-term assistance? Are you unsure exactly what a payday loan is? A payday loan is a small loan, usually for $500 to $1,000, which is intended for you to receive some cash in a financial emergency. Additionally, these loans typically have extremely high interest rates and high penalty fees. They must be paid back quickly and in full. In return for some quick cash, you will most likely provide your lender with a pre-dated check or authorization to debit your account in the future. You may understand a payday loan is an easy way to quickly get some cash, but you might ask yourself - how does it work?

Say you just went to the hospital and you choose to borrow $500 for your insurance deductible using a payday loan. In order to quickly receive your cash, you will write a post-dated check for $550, which includes your lender's finance fee. It is written out to your new creditor. Your lender will immediately give you $500 in cash and assign you a payment period of roughly two weeks. When your two weeks are over, you pay your lender $550 in cash or let them deposit your post-dated check which you originally gave to them as collateral. If you are unable to repay your lender within the allotted two weeks, you will be charged high interest penalty fees every week until you are able to fully repay your lender.


The most positive benefit of these loans is receiving cash quickly and easily, especially if you have no other financial options. These loans are also beneficial if you do not have a credit card or a savings account. Additionally, since these loans do not require a credit check, they are a great option for you if you are in serious debt and cannot receive a conventional loan due to having poor credit.

These loans have extremely expensive late fees and penalty charges. Most other types of loans, such as home loans and credit cards, carry an annual percentage rate of roughly 7 to 15 percent. This type of loan posses an APR of 300 to 5,000 percent. You must repay these loans as quickly as possible. Additionally, these loans are sometimes inappropriately supplied to you by shady banks or lenders. Some states, such as New York, have banned these loans. However, a few banks in New York will partner up with other lenders outside the state, such as New Jersey, in order to sell these loans to you. Since these loans carry such high penalty and late fees, it is imperative you read the fine print and understand your rights as a consumer before choosing to take out this type of loan.

The Choice is up to You
You should always contemplate all of your financial options before deciding to purchase a payday loan. You must decide if you are really in a financial emergency. These loans are useful for one-time purchases, such as hospital bills; but, they are not wise for unneeded expenses such as purchasing a new TV. You should also be aware that your credit card's interest rate is much less than a typical payday penalty or late fee. However, if you do decide to purchase this type of loan you should shop around for a payday lender which has the lowest fees and rates, borrow only as much as your next paycheck, and prioritize your loan repayment. If you follow these guidelines, you can effectively take advantage of a payday loan's benefits.



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