Unforeseen accidents and events can occur in our lives that can put us in troubling financial times. For example, costly hospital bills due to a medical emergency or necessary car repairs can lead us to drain most, if not all of our financial savings, causing us to fall behind on other necessary debts. It’s something people don’t usually want to do, but if no other options are available, short term, cash loans can help individuals avoid these troubling financial situations.
Short term loans, frequently referred to as pay day loans, are small loans that can be utilized when you are temporarily out of money. Payday loans can help to cover the cost of car repairs, medical bills, home damage, or any other unexpected expense until you receive your next paycheck. To receive pay day loans, a check is typically written for the amount you are borrowing, plus a fee assessed by the payday loan lenders. Usually you can leave the check with the lender, and they cash it once you are ready to repay the loan. Many The repayment of a payday loan will typical be due on your next payday that falls between 13 and 30 days. If you are paid monthly, and your next payday is greater than 30 days away, it is common for your loan will to due in 30 days. You can also receive payday loans online. But, according to U.S. law, a payday lender can use only the same industry standard collection practices used to collect other debts.
In general, pay day loans are extremely expensive. Most of these short term, cash loans feature an incredibly high APR (annual percentage rage), sometimes of several hundred percent. The Consumer Federation of America has recently conducted research comparing payday loans to the alternatives. The findings show that you could pay about 426% APR on a payday loan, but paying an APR above 1000% is not unheard of. These incredibly high APR percentages are what makes these loans so expensive, and frequently places the borrower in a financial situation much worse than their situation before taking out the loan. Furthermore, bouncing checks that you write to the payday loan establishment can end up on your ChexSystems file, drastically effecting your credit score.
If you are unable repay your payday loan when repayment is due, you can “roll it over” so that the loan is extended. You don’t have to repay it, but the fees will keep accumulating. If you keep stretching out repayment date, you’ll pay far more in interest and fees than you ever borrowed in the first place. If you’re having financial difficulties, payday loans commonly make matters worse, so it’s important to use extreme caution when considering these loans. If you know that you can repay the loan when payment is due, then pay day loans can be a quick and easy way to get the money you need, and should only be considered for emergency situations
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