How often do you take out a payday loan? Be it your only option in your emergency, or simply a quick way to cover some expenses of your kids, a payday loan is becoming more and more people’s favorite quick financing option. This is especially true in this modern era, where you can simply get your smartphone and apply for one. Find out more about this fact in this Article here. But little do they know, payday loan lenders actually offer hellish-ly expensive APRs and interest rates. But there are more than just those.
It’s a well-known fact that payday loans are among the most expensive forms of financing, with APRs often reaching triple digits. Many people are unaware of the extra costs they will face when paying back the loan. That’s why today we’re going to open your eyes with the facts we’ve revealed from insiders. Here are some sneaky secrets these payday loan lenders never want you to know.
There Is No Such a Thing as a “No Credit Check” Payday Loan
Okay this might shock you a little. Payday loan lenders don’t mention it, but they do run credit checks before granting money. But the real problem is that many borrowers think they can get away with getting a payday loan without having to face their credit score, which is usually not true. As a matter of fact, most payday loan lenders will verify your credit and the information provided, in order to determine if you’re eligible for a loan.
You Will Pay a Crazy Amount of Addition Fees
It’s true that the perk of having a cash advance loan is that you get the money in your pocket quickly (in some cases instantly). But what many people don’t realize is that payday loans come with extra fees and charges. In addition to the interest rate, there are also late payment fees, processing fees, origination fees, and other miscellaneous costs that can add up quickly. A report from the Consumer Financial Protection Bureau found that some borrowers end up paying more than triple their original loan amount in fees and interest.
“Fixed” Interest Rates Is Not Real
Most payday lenders advertise “fixed” interest rates, but this is often misleading. A fixed-rate implies that it will remain the same throughout the entire duration of the loan, yet payday loan lenders often adjust the rate after a certain number of payments. The result? You end up paying much higher interest rates than you were originally promised. So if you’re considering a payday loan, make sure to ask the lender about any changes in interest rate.
Defaulting on Your Loan Can Have Serious Consequences
Defaulting on your payday loan can have serious consequences, such as late payment fees, collection calls, and even legal action. And depending on where you live, it may be illegal for payday lenders to take such action. So if you find yourself in a tough spot, it’s best to be proactive and contact your lender for help instead of just ignoring the problem. Trust me, you don’t want to wake up one morning with a court summons.
So what’s the takeaway? Payday loan lenders often take advantage of people who are desperate for cash, so it’s a must that you know the facts before you sign on the dotted line. By understanding the sneaky secrets these payday loan lenders never want you to know, you can avoid getting into a financial quagmire and escape unscathed. Just remember to read the fine print and ask your lender questions so that you can make an informed decision before taking out any loans.
