There are now dozens of different companies which offer payday loans to individuals, often without even requiring a credit check. If you want to get the best deal, it is important that you take your time when picking a payday lender. Here are the main points you should be considering when looking for a payday loan.
- Reputation of lender: The most important thing to consider when choosing a payday loan is the reputation of the lender. There are still some unscrupulous lenders out there who will try to scam you or take your money through up-front fees. In rare cases, you might even come across some identity thieves when applying for a payday line. Only take a payday loan from a lender which has been in operation for at least a year (the longer the better), has contact information, and ideally has some form of live customer support. Read reviews of payday lenders to see if any customers had problems with that lender.
- Finance Charges (APR): Most payday loans will list their interest as a finance charge. However, it is often difficult to understand the true cost of the loan just by these charges. Instead, you should compare their APRs (annual percentage rate).
- Loan amount: Almost all states have legal maximums for payday loans. In most cases, this amount is $500. Some lenders will only offer smaller loans though, such as $100 or a certain percentage of your monthly wage.
- Repayment: It is very important that you read through all the terms of repayment and make sure you understand them. Each lender can vary on these terms and it can make a big difference to how much you end up paying in the long run. For example, some lenders will set an exact date for repayment whereas others will be flexible. You may be allowed to extend your loan for free or new charges may apply for extension. Always consider the terms under the worst possible scenario – such as what will happen if you can’t repay your payday loan right away.
- Eligibility: Each payday lender will set its own standards for eligibility. In most cases, it is very easy to get a payday loan but you may be required to show certain documentation or meet certain criteria. If you can’t meet this criteria, then do not apply for the payday loan.
- Other Fees: Always be on the lookout for any other fees associated with the payday loan. For example, you may be required to pay $5 for the ID check or employment verification. Avoid any lenders which make you pay these fees up front. Make sure you understand what the fee structure is for late payments, extending the payday loan, or any other possible scenarios. If a payday lender doesn’t openly list its fees, then you should move on to another lender. There are plenty of options online for payday loans so there is no reason to choose a lender which isn’t forthcoming!