These are short-term loans, typically with very high interest rates. They usually range from about $250 to $500 and are meant to get you through till your next paycheck. To get one, all you need is a source of income and a bank account to send the money to, regardless of having bad credit or no credit at all. They are thought of as a risky source of immediate cash because people who use them usually are not financially stable. If they are not repaid very quickly, their high interest rates can cause your obligation to swell out of control. We will cover some of the specifics of them so you can avoid falling into their trap, as well as offering safer alternatives.
How do they actually work?
The process of getting one is extremely simple. You will request a loan at https://expertpaydayloans.com, show the lender proof of income and a valid bank account, and they will deposit the cash into your account within the hour. The borrower must give signed consent for the lender to withdraw from their bank account. This is required because if you miss your scheduled repayment in two weeks or a month, they will automatically take the money out of your bank account.
Every state has different limits and restrictions on how much you can borrow with a loan. The cap for the loan size you can take out varies from $300 to $1000, but the lender will take your income, expenses, and previous payday loans into account for what they will lend you.
How much can they cost you?
Interest rates on them can be astronomically high. The average rate on one is $23 dollars per $100 borrowed, or a 600% Anual Percentage Rate for a two-week loan. When payday rolls around and the loan is not fully repaid, the lender charges the interest on your loan, causing your obligation to grow exponentially. For the average loan, the interest fees are almost double the principal borrowed. When you do not pay, the lender will repeatedly attempt to withdraw money from your bank account, requesting smaller and smaller amounts if the transactions do not go through. This can mean even more fees from your bank for failed withdraws. However, since lenders usually do not inquire into the borrower’s credit, no reports are sent to credit firms. That is unless the lender decides to sell your debt to a collection agency in the event of missed payments.
Most of the time, taking on this kind of debt is one of the worst financial decisions someone can make. Often, there are many other places where you can reduce or defer expenses, or receive cash from a different source. Using a credit card or even asking a relative to borrow money is a better alternative than taking one.
Payday loans have rightfully earned a bad rap, as they are a very dangerous cycle to become trapped in, and often a cycle you never needed to get into.