A lot of thought and planning should go into getting a loan. It’s arguably one of the most important financial decisions adults get to make in their lifetime, especially if you are opting for a quite volatile funding option like a payday loan.
Making a capricious decision to take out a payday loan could have dire consequences. That’s why research is necessary and intending borrowers are usually advised to consider all possible options before they decide to settle with payday loans.
Here, we highlight some of the most important considerations that borrowers ought to make before getting payday loans. But that’s not all. We present alternative loan options that you can consider if you eventually find out that a payday loan is not fitting to your financial circumstances.
If you fall on the side of the spectrum that finds payday loans to be favorable, this article presents information on how to search payday loans on WeLoans. Follow through the subsequent sections to discover the nature of payday loans and when you should consider applying for one.
What are Payday Loans?
Ever been in a situation where you were running late on a bill or payment and wished your paycheck came sooner? Well, payday loans are a form of answer to that wish. This type of loan is one where you receive a relatively small amount of money from a lender who takes your next paycheck as security for the loan.
Payday loans have attracted government attention over the past few years, thereby causing regulatory authorities to limit how much you can borrow on a payday loan. In most states, you can get between $500 to $1,500 in payday loans. Unfortunately, the loan is short-term, so borrowers need to repay within two to four weeks.
Getting a payday loan is usually very easy as you, most times, only need to present proof of employment income. Your lender can decide to charge your next paycheck automatically or have you repay by issuing the check in its favor.
Factors to Consider Before Applying for Payday Loans
Although payday loans may seem like a quick and convenient option, especially if you’re anticipating a paycheck in the next few weeks, it’s important to exercise caution before applying. While having your income source to repay the loan can make the process easier, it’s important to carefully consider the risks and take necessary precautions. Below are some factors that Nabila Yusuf from WeLoans advises people to look out for.
State Payday Laws
Unfortunately, not all states in the US permit lenders giving out payday loans. This calls for some level of vigilance. Don’t just confirm if your state allows payday loans, ensure you know the maximum borrowing amount and any APR limits.
Annual Percentage Rate
Payday loans have gained a reputation for being exceedingly costly and have the potential to ensnare borrowers in a never-ending cycle of debt if proper caution is not taken. As such, it’s essential to verify that the Annual Percentage Rate (APR), which includes both the interest rate and additional fees, is manageable for you to repay before considering a payday loan.
Having a Trustworthy Lender
It’s equally crucial to select a trustworthy, impartial, and accountable lender, just as it is essential to consider your loan alternatives thoughtfully. Verifying that your lender doesn’t conceal any charges or manipulate the loan amount or terms is crucial. That’s why it’s advisable to use a reputable broker like WeLoans. You’ll have your pick between several reliable direct lenders going into your payday loan application.
Where Can Borrowers Receive Payday Loans?
One interesting feature of payday loans is that since they are popular, they are also relatively easier to secure. Many financial institutions look to offer payday loans to their customers because they seem to be in high demand. Below are some of the most trustworthy platforms where you can get access to payday loans.
Direct Payday Lenders
These are dedicated lending platforms that offer direct payday loan funding. Direct payday lenders could either be a walk-in store or an online platform. In addition, they usually do not require collateral when you submit an application to them. However, you’ll need to submit your employment records so the lender can confirm that you have an upcoming paycheck to cover the loan.
Credit Unions
Credit unions are special financial institutions that offer credit borrowing options to only their members. To enjoy the services of a credit union, you’ll need to register at one. One of the perks of their service is that they offer reduced interest rates and several by-the.side banking options.
Online Brokers
Perhaps your best bet for payday loans, brokers are like middle men that help you secure the best deals from direct lenders. When you apply through a broker like WeLoans, the company sends your information to multiple reputable lending partners in its networks. These lenders reply with offers that you can sift through and compare to enable you to select the best and most affordable payday option.
Are There Any Alternatives to Payday Loans?
One of the best decisions you can make before taking out a payday loan is considering all the possible alternatives available to you. In case you are unaware, below are some of the best substitutes to a payday loan.
Funding from Relatives
By borrowing from relatives, you can avoid the hassle of paperwork and high interest rates. However, it is important to repay the loan within the agreed-upon timeframe in order to maintain a positive relationship with your lender. The amount you can borrow may also be dependent on the lender’s financial condition.
Title Loans
If you own a car, you may be able to obtain a short-term loan by using the vehicle’s title as collateral. With a title loan, you can continue to use your car while you repay the loan. Although title loans can be expensive, they are typically less costly than payday loans.
Personal Loans
Personal loans are installment loans that allow borrowers to repay the loan in fixed payments. Compared to payday loans, personal loans usually offer larger loan amounts, with some lenders offering up to $30,000. In addition, personal loans typically have lower annual percentage rates (APRs) compared to other borrowing options.
Home Line of Credit
Also known as home equity line of credit (HELOC), this alternative funding option allows you to borrow against the equity in your home mortgage. The amount you’re allowed to borrow is determined by the difference between your outstanding mortgage and the total value of the home.
Final Thoughts on Payday Loans
Payday loans are usually a good option for anyone looking for short-term funding and nothing more. If you fall into this category, it would be very helpful for you to consider the possible APR of the loan and your choice of lender. You can also opt to use a broker like WeLoans to help you connect to the most reputable direct lenders in the market.
