If you’ve ever needed a short-term cash loan but didn’t have enough money in your checking account, then you know all about payday loans. They’re a common form of credit for people with bad credit or no credit at all who need fast cash. While it may be tempting to turn to them when you don’t have the funds readily available, there are some things that you should consider first.
First off, make sure you understand why you can’t get a traditional bank loan. If you have bad credit or no credit history at all, banks will probably say “no.” That doesn’t mean they won’t work with you on an emergency basis – they just might not offer you much more than $300 per month for a car title loan. On top of that, if you don’t pay back the money within 30 days, the bank has to take out their tools (usually referred to as repossessing) and sell whatever they can. So you definitely want to avoid those types of short-term loans when possible.
Second, make sure you understand what you can and cannot do with these kinds of loans. Most lenders require borrowers to use the cash for something like rent or utilities, which is fine. However, if you’re using the money for food, medical expenses, or other necessities, then you risk getting sued by the lender because you weren’t able to pay the loan back. And if you try to return the money after receiving it, you could wind up being charged with fraud or identity theft – both of which carry serious penalties.
Third, make sure you know how much interest the lender charges on the loan. It may seem like a small amount, but it adds up quickly. A single payday loan with a daily rate of 400% means that you’ll end up paying over $100 in fees every two weeks. That’s a lot to pay on a loan that only lasts for two weeks.
How to Shop Around For a Best Rate
When choosing a payday lender, start looking online right now. The best place to find one is through a search engine. Just type “payday loans near me” into Google and you’ll see numerous results show up. These sites are generally run by local companies, so the rates should be competitive. Make sure you read the terms and conditions thoroughly before agreeing to borrow any money. Some websites will provide quotes from several different lenders and then ask you to pick the cheapest one, even though you may be eligible for lower rates elsewhere.
Once you’ve found a few lenders, compare their quotes based on how many days you plan to borrow the money for, as well as the amount you would like to borrow. Always put down the lowest number of days you can borrow the money for, since this will give you the most flexibility in case something comes up.
Finally, don’t pay attention to any offers that seem too good to be true. Lenders often advertise very low rates and then charge huge amounts of interest later. Be wary of anyone who promises to give you a better deal than you can get anywhere else.
What Happens if I Don’t Pay My Loan Back?
It’s important to note that if you don’t pay back your loan on time, you’re going to wind up having to pay a penalty fee. This varies between lenders, but usually ranges from 10-20% of the total loan amount.
In addition to the penalty fee, you could also face legal action from the lender. In general, the borrower will likely lose their home, their car, and even their job if they fail to repay the loan on time. The lender can also seize your bank accounts and put liens on your property.
And if you think you don’t owe anything, remember that the lender still holds a lien against you for the full amount borrowed. If you decide to skip town without paying the loan back, you may be liable for thousands of dollars worth of damages. This is called civil theft, and it’s considered similar to burglary and larceny.
A person can visit Money-Wise.org and get the detail of the options that they will have do if they will not pay the loan amount. The main motive of people is to choose the date that will make easy for them to do the payment. The interest of people will depend on the amount that they are paying.
Can I Get a Refund if I Don’t Use the Money?
Unfortunately, there’s no such thing as a refund on a payday loan. Even if you don’t pay back the entire loan, you’ll still be required to pay the entire principal plus interest.
The exception to this comes in cases where the borrower is forced to use the loan for reasons beyond his control. For example, if someone gets hurt in a car accident and needs to replace the vehicle, he can apply for a loan with the goal of paying the damage repair bill. Since he had to buy a new car anyway, he shouldn’t have to pay the entire loan back.
However, if he uses the loan to pay a friend or family member, he wouldn’t qualify for reimbursement.
Where Can I Go When My Payday Loan Runs Out?
There are plenty of places to go for help when you’re facing a cash crisis. Check with friends and family for a loan, or look online for personal loans from nonprofit organizations. Many charities will extend emergency funding to people in dire situations, but make sure you’re aware of the requirements before signing up for a loan.
Another option is to visit a community center. Your local social services department may be able to help you out, especially if you live in a large city. Contacting your local government office will also let you know whether or not they have programs or resources that you can tap into to obtain a loan.
