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A Brief History of Loans
No one can say for certain where the history of loans began… it's likely that people have been practicing lending and borrowing for as long as there has been a concept of ownership. The history of loans can be documented at least several thousand...
Loans from Credit Card Banks
As opposite to what used to happen in the old days, business
loans are now available not only for commercial companies, but
also for self employed people. In fact, this last group seems to
take the most advantage from this kind of loan, as...
No Credit Car Loans - Even With No Credit History, You Can Still Get Approved
Even it you have no credit history, you can still get approved for a car loan. With a car loan, you can purchase your vehicle and build your credit history. Online car loan lenders make shopping easy, and you can find low rates compared to...
Payday Loans: Convenient Money or a High-priced Trap?
Do you want cash now however your payday is a week away, are you short of cash and require financial help? If so you have in all likelihood heard of payday loans and may be wondering about using this type of credit service. If you need quick cash a...
Second Mortgage Loans
Second Mortgage Loans
While business loans may be beneficial for some businesses,
there are other options available. If you are a home owner as
well as a business owner, and find the need for a loan for
business purchases or expansion is in...
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Payday Loans – The Legal Loan Sharking Industry
Laws have been created to protect people against "Loan Shark" practices in which short-term loans are given out at excessive interest rates. There is an industry that has come of age the last couple of years that has circumvented these laws. Enter the Payday loan industry.
Payday loans is a some-what new multi-billion dollar industry in which people borrow money to tithe them over until their next payday. These loans also go by the names cash advance loans and paycheck loans. They prey on the lower class that find themselves short of money before a payday.
The one thing to consider when looking into a payday loan is the APR or Annual Percentage Rate that these loans carry. At first glance, you may think paying $240.00 for a loan of $200.00 for two weeks is ok. The A.P.R of this loan comes to a whopping 520%. That is the amount this loan would cost if played over a years time. Compare this with a high interest credit card of 29%. When you see it compared to these numbers, you can see they are not the bargain you first thought it was.
A representative from a payday loan company has agreed to be interviewed for this article on the condition his identity and that of his company be anonymous.
I asked him, how can they can justify such enormous interest charges. His reply was "Because we can. There are loopholes out there that allow us to do this. This is a high risk loan for most cases so we need to charge enough to cover bad loans and to make a profit."
When asked about if payday loans are ever a good idea, his response was "Sure. For example if you will be late on a credit card payment of $70.00 and will be charged a late fee of $30.00 then the APR of the payday loan justifies getting one. You will save points if you get a payday loan and not pay the higher interest rate of the late fee."
When you should get a payday loan:
There are times when payday loans are justified as discussed above. The primary example when your late fees are more expensive than the late fees paid to your creditors.
Another non-tangible justification is when you can avoid getting reported for a late payment. This can be far more expensive than any payday loan fee in that it could affect the cost you pay for future loans. This is
especially true if it’s your mortgage or car payments.
Yet another reason to get a payday loan is that you determine that the cost is worth it to you personally. If you are headed for the long awaited vacation and could use a few extra bucks to enjoy and can afford the fees then you should look into this.
A final thought on when you should get a payday loan is if you need that cash and it’s free. That's right free. There are a many sites out there that charge ZERO interest to all first-time customers. One such site can be found at Low Cost Payday Loans and No Fax Payday Loans.
What to look for when getting a payday loan:
The first thing to look for is the APR. Federal law has made it so that every lender must disclose the cost of any money borrow through a Truth in Lending Disclosure. This must break down the cost by APR (Annual Percentage Rate). This is the first thing to compare loans by.
Another thing to look for is the length of the term. If two companies charge the same rate for every hundred dollars borrowed but company A has a term of up to four weeks and company B has a term of two weeks, then go for Company A and take advantage of the extra four weeks. The APR of Company A is half of Company B. The reason this differs from the first item is that sometimes they base APR on a fixed amount of time (two-three weeks usually). When you read the fine print that the fee charge is fixed and may allow you to pay it back in a longer term such as four weeks.
The bottom line:
Do your homework when getting a payday loan and look for free to low cost payday loans if possible. The money you save can be substantial.
R Vigil
Finance Consultant At
Low Cost Payday Loans.INFO .
About the Author
R Vigil is an author, webmaster, and financial advisor for LowCostPaydayLoans.INFO .
No Fax Payday Loans
Note to Publishers: Publish article as is with html links please.
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