Payday loans are becoming more and more common as people look for ways to get their money faster. Cash advance loans, post-dated check loans, check advance loans, and deferred deposit check loans are all other names for payday loans. No matter what you call them, payday loans are just small loans with high fees for a short period of time. But for people who need the money right away, these fees are often a loss they can live with.
How short-term loans work
No matter where you get your loan, the general process for getting a payday loan is usually the same. Most of the time, the lender will ask you to write a personal check made out to them. This check is for the total amount of the loan plus any fees. In return, the lender will give you a check for the amount you want to borrow.
How Fees for Payday Loans Are Set
Depending on the lender, the fees for your payday loan will be set in different ways. Most, though, charge a fee that is a percentage of how much you want to borrow. Most of the time, this percentage will be based on how much was borrowed. You might have to pay a certain percentage for every $50 or $100 you borrow, for example. You will also have to pay more fees if you "roll over" your loan to make it last longer.
Protecting Payday Loans
The Truth in Lending Act lets lending companies charge high fees for payday loans. On the other hand, the Act does have some rules in place to protect the consumer. For example, the lender of a payday loan must tell you everything you need to know about the fees so you can decide if you want to take out the loan or not. This information must be given to you in writing and must include the dollar amount of the finance charges and the APR for the loan.
How to Choose the Right Payday Loans
Even though you have to pay high fees for payday loans, you can get the best deal possible by shopping around. Be sure to look on the Internet to find out what different lending companies have to offer. There is a lot of competition out there, so you don't have to work with the company with the most expensive rates.
