Posted On: Thursday, January 5th, 2012 at 10:08 pm
A pay day loan is a short term loan designed to provide emergency cash to borrowers at high interest rates. As the term implies, the loan has to be repaid on the next pay day. Right now, it is very easy to obtain a loan from lenders, especially on the Internet. But before applying for one, make sure to research on the lender and the terms of the loan as well.
Know the Interest Rate
Some lenders do not disclose the APRs on their loans due to the high rates involved. Typically, a pay day loan has an average APR of 300%, but can reach as high as 650% to 780%. This is the reason why borrowers should be very careful during the loan application process. It is always important to check whether the lender discloses the interest rates or not.
Check for Scams
Not all lenders are honest. Make sure that during payday, the money borrowed should have been repaid in full. Sometimes, lenders only withdraw the financial charges and extend the loan for another payday, which then repeats the cycle of interest charges. Hence, it is important to do some research on lenders to make sure they are honest and are not scams.
Categories: Loans