Payday loan stores seem to be popping up everywhere and a few people think that they are the best things ever, but in reality they are the tabloids of the credit industry, as far as reputable credit institutions are concerned. It’s obvious that they are supplying a tangible need for the demands of the public, or else they wouldn’t be surviving. So if that many consumers are freely choosing to deal with them, then why are payday loans bad?
Payday lenders rarely get to check the credit status of the applicants. The expediency and privacy involved in applying for this type of loans makes it an attractive option for people with a poor credit. To qualify for a payday loan, you need to provide proof of being a citizen, above the age of 18 years and being in employment. Furthermore, the application process can be performed in less than 30 minutes and the money received in no time. If the payday lender does not hand the borrower a check when they apply, they can expect to receive the money deposited electronically in their accounts, within 24 hours. When you apply, you will see a very high Annual percentage Rate (APR), but you do not have to worry about this rate because it is calculated annually, and not weekly or monthly. This means if you choose to extend your loan 26 times from the date of repaying, your interest will be based on the annual rate.
If you have been turned down for credit or are unable to purchase items on credit, then you should look at your credit score without delay. If you have a poor credit rating it can be difficult to know how to start repairing it and the task can seem almost impossible. But it is possible and is worth doing. Having a strong credit score will stand you in good stead for all your financial needs now and in the future so if you score is low it is worth making the effort to improve it.
You need also consider that when you use a credit card, it may end up taking months to pay it off which will cost you a lot more than you needed in the first place. Interest charges can really add up and if you are late on your payment(s) you will be charged a substantial late fee as well. Payday loans are meant to be utilized for short-term and temporary financial times, paying them off when you get your next paycheck. You will still be charged a fee for being able to borrow but once you payoff your initial loan amount and fees, you will be free and clear of your payday loan debt. In the event that you can’t payoff your loan in full, most lenders will work with you.