Payday loans in the US: the right solution to borrow money quickly?
Although unheard of a few years ago, its now possible to borrow money very quickly, and for the very short term with what have been called 'payday loans'.
But is this the best way to borrow?
Payday hasn't arrived yet, and there's no money left. What to do? It's quite possible that there's been an ad on telly suggesting that all you need to do is make one quick phone call, and you can borrow money to tide you over til pay day...
Simple advice: Always check all the options first
Although independent financial advice should always be sought, its a generalisation to say that one pays for the convenience of the fast money transfer...
As usual, be sure to get the loan paid back on time, if not sooner
There are plently of short-term lending solutions that beat payday loans in terms of the interest you pay. Better still, is a 'soft loan' (ie one that interest is NOT payable on) available from a family member or friend in the first instance? It may be pride that is the thing to prevent from asking, but if you were to be told that, to borrow £100, for a month or two at most might cost you £30-£60 to pay back (PLUS the original £100!), would that make a difference?
Know why. Really. Is it to fill a hole properly temporarily, or is it really because more is being spent than earned?
One of the big names, or a smaller concern?
If you look ONLY on the internet , or ONLY pay attention, the WHOLE market isn't really being taken into account is it? Shopping around is ALWAYS good before you commit!
The small print
Read and re-read the whole of the terms and conditions of the loan being taken on. Is there a plan of what to do if there is unexpectedly not the money to pay back the loan, in full, on or before the due date?
Word of mouth is still valid!
Ask your friends and family if they have a company they can recommend> Better still, if possible, ask for a soft loan (interest free) from a family member.
Our top tips for comparing payday loans:
Yes, comparing quotes for payday loans can be a non-trivial task. Always compare like-for-like. It's no good to compare a quote, say, from a loan provider that offers a very low interest rate, if this is eclipsed by the 'setup' fees or some other similarly-named money-making scheme
> What counts as a responsible lender?
Any responsible lender will not lend money unless it can be reasonably certain that it can be paid back on timeHowever, thinking about it logically, there is a certain conflict here: when money is paid back for a loan, on time, it accrues less interest than one that is paid later! When getting any kind of loan for the first time, its important to consider this important point!
Getting a payday loan is mostly sold to you by convenience, and one can expect a very high interest rate on the loan (see above). Make sure there is no better option. If there isn't a lot of personal debt already, then the chances are, if you can possibly wait a few days, it may be possible to borrow money, short term, for ZERO percent interest, via one of the many excellent zero percent credit card deals out there at the moment.
> Are payday loan companies regulated?
Yes they are! This is useful to know if you later run into trouble or dispute with the payday loan lender.That said, if used appropriately, many people will find payday loans suitable and useful. Of course, horror stories, can always be found on the web and elsewhere, because mistakes are made, but generally most issues are caused by people who simply borrow more than they can afford to repay. Put simply, make sure that the debt serviced does not fall into that category!
In the US,Payday lending is legal and is regulated in 37 states. In 13 states it is either illegal or not feasible, given state law.If there is a clear issue, this means you must consult the state for individual advice, if needed.
> Are payday loans really instant money?
Yes they are! This is facilitated via a direct wire or money transfer.But do please remember you are paying for that convenience, typically in high interest rates, additional set up fees, and so forth.