If you need money for a financial emergency, it can be a stressful situation. You may not be able to ask for a loan from family and friends, and you may not be able to ask for an advance on your next paycheck. That's why payday loans can be a great help. However, before you accept a payday loan, you need to make sure you research them properly so that you can pay back the loan without causing yourself financial trouble. Here are some things to consider before getting a payday loan.
The Interest Rate
Because payday loans are short-term loans, you will find that interest rates are typically higher than traditional loans that you might get from the bank. When you repay the loan, you will have to remember to factor in the interest costs, so it is a good idea to find a rate that is reasonable. Don't immediately sign up with the company offering the lowest interest rate, as they may have other fees that may drive up the total cost of the loan.
When you are not able to pay your entire loan back at the end of the grace period, most payday loans allow you to make a minimum payment and roll over the rest of your loan. That minimum payment is typically referred to as the "rollover fee." Before you accept a loan from a particular company, you need to know how much the rollover fee is, and how many times you can roll over your loan.
You also need to ask about other fees that may be included in your loans. Some companies put their additional fees in the fine print of their agreements, but talk to someone at the company and directly ask about the fees you will be responsible for in addition to the principal loan, interest and rollover fees. When you know the total cost that you'll have to repay, you can make better decisions about which company to work with and how much to borrow.
Borrowing the Minimum
Sometimes, the payday loan company will offer you a loan that is a greater amount than you originally asked for. If it is at all possible, consider only borrowing the minimum amount that you are absolutely sure you can repay. The more you borrow, the higher interest costs will be, and the more tempting it will be to roll over.
When you keep the above four things in mind, you will be able to make solid decisions about which payday company to work with and how much money you should borrow. Even though you are in the midst of a stressful financial situation, give yourself enough time to do some research so you can choose a reputable payday express loan company.