Before you borrow money, it is important to consider your loan options and how they could fit with your financial situation. You should be aware of online loan interest rates, loan repayment options, and customer service accessibility among other things. Payday loans are often associated with high annual percentage rates (APR). But don’t let a high APR scare you. APR is what you would be paying if you had the loan out for an entire year! Since a typical payday loan is paid off in only a few short weeks, this means that even with a higher APR, you most likely will be paying less than overdraft fees or other penalties associated with negative accounts. APR and rates vary from state to state and lender to lender, so be sure to assess all aspects of your loan options first and not just what looks to be the lowest APR. Sometimes there could be a low APR but significantly higher fees on top of your interest, so you’ll be paying more in the end. Do your research and decide which loan option is the best for your needs.
In many cases, borrowers write a post-dated check (check with a future date) to the lender; if the borrowers don't have enough money in their account by the check's date, their check will bounce. In Texas, payday lenders are prohibited from suing a borrower for theft if the check is post-dated. One payday lender in the state instead gets their customers to write checks dated for the day the loan is given. Customers borrow money because they don't have any, so the lender accepts the check knowing that it would bounce on the check's date. If the borrower fails to pay on the due date, the lender sues the borrower for writing a hot check.
By checking the "I AGREE" box, you consent to receive the disclosure immediately below electronically. You may withdraw your consent by unchecking the "I AGREE" button before continuing, but understand that doing so means that we will not be able to contact you as described below. To update your contact information or obtain a copy of the disclosure, you may call us at 800-922-8803, or email us at email@example.com. You understand that you need a computer with Internet access and a compatible browser to view, print or save this disclosure.
The most popular type of cash advance is borrowing on a line of credit through a credit card. The money can be withdrawn at an ATM or, depending on the credit card company, from a check that is deposited or cashed at a bank. Credit card cash advances typically carry a high interest rate, even higher than the rate on regular purchases: You’ll pay an average of 24% – about 9% higher than the average APR for purchases. What’s more, the interest begins to accrue immediately; there is no grace period.
The propensity for very low default rates seems to be an incentive for investors interested in payday lenders. In the Advance America 10-k SEC filing from December 2011 they note that their agreement with investors, "limits the average of actual charge-offs incurred during each fiscal month to a maximum of 4.50% of the average amount of adjusted transaction receivables outstanding at the end of each fiscal month during the prior twelve consecutive months". They go on to note that for 2011 their average monthly receivables were $287.1 million and their average charge-off was $9.3 million, or 3.2%. In comparison with traditional lenders, payday firms also save on costs by not engaging in traditional forms of underwriting, relying on their easy rollover terms and the small size of each individual loan as method of diversification eliminating the need for verifying each borrower's ability to repay. It is perhaps due to this that payday lenders rarely exhibit any real effort to verify that the borrower will be able to pay the principal on their payday in addition to their other debt obligations.
†The savings information shown above is calculated by CreditKarma.com. This calculation is based on your credit report and account profile combined with offer data and is provided for illustration purposes only. Reasonable efforts are made to maintain accurate information, however all offer information is presented without warranty. Your actual savings will depend on the terms and conditions of the offer which can be reviewed on the provider's website by clicking on the "Get Started" button.
Payday loans have been in the news a lot recently, but not all short-term loans carry the same risks. LendUp Loans are an alternative to traditional payday loans from a licensed lender. A typical payday loan is exactly that: You borrow money against your next paycheck. However, borrowing against your paycheck often imposes several restrictions on this type of lending: