subject: Understanding Payday Loans [print this page] With the way today's global market has gotten, we are beginning to hear more and more about payday loans. Ads for payday loans come on television and on the radio rather frequently. They make payday loans sound like a marvelous fast cash option, informing potential users that payday loans are easy to get, even if you have no credit or bad credit. While this is true of payday loans there are a few things about payday loans that are good to know before getting one.
The first is that payday loans are extremely short term loans. They get the name "payday loans" because the cash is lent to you but is supposed to be paid back by the next payday. While you can ask for a roll-over period to extend your time before paying off payday loans, this is not how things normally work. In fact, once your next payday comes, the cash you owe for your payday loans can be withdrawn directly from your bank account by the lenders.
Another thing which is important to understand about payday loans is that the interest on payday loans is extremely high. In fact, the interest rate on payday loans is higher than the interest on almost any other loan. This is because you can get payday loans with an extremely poor credit score, meaning the lenders are taking a chance on you to see if you'll actually pay the money back. However, even if you have good credit and get payday loans, you are going to end up paying the lenders significantly more than you borrowed, so it isn't a good idea to get payday loans unless it's an emergency.
Third, if you are considering payday loans, it is important that you understand how rollovers in association with payday loans work. Rollovers are basically extensions on payday loans, which you can apply for if you realize that you can't pay off your payday loans by that next payday. Rollovers normally allow you to extend your time on your payday loans until another payday. Rollovers can be renewed more than once on any given payday loan, but with each rollover you get for each of your payday loans, there are going to be additional charges and fees, and perhaps even a heightened interest rate.
With that said, hopefully it is clear that there are many risks associated with getting payday loans. Because payday loans are easy to get, they are difficult to pay off, and can lead to further debt to your lenders. However, this doesn't mean that there aren't some benefits to payday loans. Payday loans can be very helpful to families who are truly in need. If you find yourself in a situation where you need cash to pay for a medical emergency or an urgent repair job, payday loans may be the best way to get that cash. It just is important to go into the payday loan process with a ready understanding of how payday loans are financed, and their drawbacks. If you have a solid understanding of APRs and rollovers, payday loans won't be as tempting or as easy to become ensnared in.
