With just the click of your mouse, you can solve your money issues in a few minutes. However, people apply for loans without knowing all the facts about payday loans online.
Right, today, it’s so easy to apply for a loan online. It cuts the long queue and waiting when you apply for loans in traditional lenders and banks. It’s even more convenient because, in just a matter of minutes, you can address your financial hardships.
But is enough that you know these things? There are many things that you need to know before applying for a loan on the internet. Knowing all these things can avoid you from the red flags and problems that may arise when dealing with illegal lenders.
What you need to know about Payday Loans
Payday loans are known also as a short-term loan, unsecured loans, and cash advance. It is a short amount of credit that you can apply online or to a storefront lender.
These days, the availability of online lenders make it easier, fast, and convenient to apply for the loan. You can simply fill up the online application, submit the documents, and wait for the approval.
Who is the target market for the loan?
People with low income, those with bad credit history, and those who do not qualify for a bank or other loans can apply. If you have experience of getting declined for a loan due to your credit profile, you are still eligible for a payday loan.
Lenders usually ask for minimum requirements including an identification card, an active bank account, and a proof of paycheck. Since there are only a few requirements, you’ll know the results of your application within the day.
How much is the cost of the loan?
Since an unsecured loan is less stringent than other loans, you can expect much higher fees and interest. It is unsecured because you don’t need collateral to get approved.
Also, lenders allow you to apply even you are a risky borrower. This is the reality of applying for a payday loan. You pay for the risk that lenders take.
Lenders ask a fee of $10 to $30 for each $100 borrowed. Usually, most lenders give a fee of $15 for a $100 loan. In general, you have to pay for an annual percentage rate (APR) of 400 percent for a loan.
There are other fees that you need to pay aside from the interest. Additional charges may apply for late payments. You may also pay extra if you use your prepaid debit card for the loan.
In case you fail to repay on time, a repayment scheme may be offered to you. Here, you need to pay a fee for the new repayment plan.
What is rollover?
Sometimes, lenders may offer you a rollover in case you cannot pay your loan on time. A rollover means that your loan is extended for a time and you have to pay a fee for that.
Not all areas provide it to borrowers. Ask your loan provider if it is available. Some places strictly prohibit a rollover.
You have to pay for the principal loan, its interest and the charges for the rollover. Your credit is carried over to the next loan.
Is it safe to apply for loans online?
There are risks involved every time you give your personal and bank information online. Some lenders who are marketing themselves are not actually lenders. They are actually known as lead generators whose job is to find clients for these lenders.
You need to watch out for signs when they mention these lines, such as “we are connecting you to our partner lenders,” or “we found the right lender for you.” These are indications that you are dealing with a fake lender who make money out of your personal information.
Aside from that, you need to spot that you are dealing with a trusted lender online. Spot for signs like they are asking you for a processing fee or an upfront fee. Others may also give you false hope that they are guaranteeing you a 100 percent approval.