The payday loan industry helps - at a high cost - millions of people every year who find themselves in financial dire straits. These loans - as their name describes - are short term loans that you must pay back on your next paycheck. Therefore, it is important to realize and respect its purpose in the financial world: to provide a quick solution to a financial problem of emergencial nature.
B2B Pay suggests that you make sure that - if you are considering such a loan - to perform your due diligence and research terms and conditions of all available payday loans as well as verify the legality of loans in your State.
General features of payday loans
- High interest rates. This means that if completely unregulated by the State of reside in, companies can charge interest and fees that reach out to the thousands of percentile. It means that taking out a simple 100 dollar loan can turn into a multi thousand loan nightmare with a bounty hunter at the tale end of that financial rope you thought you could grab on to as a lifeline. So again, do your research. If a State has some level of regulation, it means that interest rates and rollover opportunities will be easier on your pocket.
- Repayments are serious business. Because they want you to pay quickly and avoid financial problems, they charge high fees to discourage you from rolling over. It is a bad idea to effectively take out a second loan to pay the first one, so try to just do it once and make sure you have money to avoid the hassle and risk.
- The law may or may not be on your side. In States that see the loan as your responsibility, fees may be gigantic. In others, although not technically illegal, the interest rate is capped at a reasonable (yet high) rate which does not justify the risk since such loans are likely not to be repaid.
- Your credit score does not matter. What really matters is that you have a job with a paycheck. Most companies won't even look at your credit score. So, as they say, "bad credit or no credit, no problem!". Remember, you are likely to take 100 and pay back 130 or 140 which is a lot.
Choosing a good payday loan
- Reputation: there are companies with decades of experience that are de facto banks that especialize in small amount lending. Make sure you look for business scores, customer reviews from third parties and perhaps try to contact them to see if they reply quickly.
- Legally authorized to operate. In about 1/3 of American states, payday loans are illegal but there are loopholes that may still get you a loan such as taking out a loan with a native American institution.
- APRs MUST be public. All payday loan companies must disclose their rates online. Not doing so is a big tell sign that the company is illegal.
Payday loan advice
- Use it for emergencies. I mean, real emergencies. Buying a gift for a girlfriend is not an emergency.
- Do not rollover. They will go after you like the plague.
- Have a payback plan and ask for advice from the loan officer or research strategy for repayment online.
- Make sure you are eligible. 18 years old, American citizen or green card holder, proof of address.
- if you do not repay, you will damage your credit score in up to 6 or 7 bureaus for up to 10 years.
All companies we suggest here are huge and reputable. It does not mean they will not have variable rates, discriminatory practices and bad customer service. It simply means that they won't disappear overnight.
Remember that payday loan companies are very good at getting their money back. Please use these with caution!
Select your State:
Alternatives to payday loans:
- Try to ask a friend for some cash. Be honest and sincere and make sure you have a plan to pay your friend back. Do not be risking losing a friend.
- Try reaching out to your bank. A bank manager may be compelled by your story and give you a short term loan with favourable rates.
- Sell some stuff at home. It is better to trade your iPhone 7 on craigslist for a Samsung S5 then turn a 200 dollar loan into a 5 thousand dollar hassle. Yes, that sort of thing happens.
Good luck with your US payday loan!