Payday loans, short term loans or cash advance, regardless of what the lenders are calling it, are easy to get approved loans of up to a £1,000 that need to be paid off in 3 months time. The conditions of course vary, and so do the interest rates, clauses, payback options and the comfort that these loans provide. Needless to say, payday loans do offer the much needed solution in times of emergencies; however, you need to find a reliable lender offering a deal good enough for it to work out in your favour. Following are a number of key points you need to consider to make sure that your payday lender isn’t out to rip you off:
Opt for Trusted Lenders
This might seem a little too obvious to state, but these lenders are not so apparent to spot, and so you need to make extra efforts to ensure that the lender is reliable. Online payday loans are relatively easier. You can apply and get approved without having to make multiple trips to the lender. More and more payday loan websites are popping up each day, but not all of them offer reliable loans, or are even legit. Keep in mind that you will be giving away your personal information as well as your account details, so you need to make sure you aren’t exposing it to the threat of identity theft or fraud.
The best way to find a legit lender is to apply for a loan through a broker. These brokers have already checked for the lenders credentials and will make sure that your application is handled by trusted providers.
Understand The Total Cost
You hear all the talk about APR, but that’s not the only way to assess the total cost of a loan. Just because a lender is offering the lowest interest rate doesn’t mean that he/she is offering the cheapest overall cost of the loan. Sneaky costs like upfront fees and stringent late payment fees and interest rates can cost you a lot more in the long run. So make sure you calculate the total cost of the loan offered before applying for it. There are plenty of websites offering payday loan calculators to make it easier for you to calculate the total cost.
Compare Various Lenders
Rule of thumb is to compare between at least three lenders before deciding on one, but you don’t necessarily have to stick to three, compare thirty different lenders if that’s what it takes to make a more informed decision. Simply calculate the overall cost of each loan, including the fees, and the probabilities of late payments and how much a late payment will cost you before deciding on a lender.
Payday loans for the most part are emergency loans that you need approved and transferred instantly, but don’t let your immediate concerns and needs overshadow your judgment or ignore the long term repercussions of sticking to a payday loan that will become an ever increasing liability rather than a short term solution.