Four Things to Know Before Getting a Payday Loan
Life can present the unexpected at the worst time possible, and those hit with emergency expenses may not always have the funds to cover life’s little disasters all of the time. In such cases, payday loans may be a viable consideration. Here is some helpful information to get you started on the way to disaster relief.
What’s Required to Get a Payday Loan?
While payday loans are usually only for less than $500, one major benefit is that most lenders don’t do credit checks, meaning that the requirements aren’t as stringent as for personal loans.
In most cases, the requirements are simply the following
- A current source of income
- Valid identification, such as a driver’s license or I.D.
- A checking account
- You MUST be 18 or older
Most applications can be approved quickly to help get you on your way. Just make sure to check the requirements in your area as they can differ from state to state.
What Payday Loans Are for
Payday loans are not comparable to an auto, home, or even a personal loan in most cases. While other loans are meant to be paid back slowly over the course of years, payday loans are typically meant to be paid back within two to four weeks. This means that payday loans are for short-term use. The terms and conditions of payday loans typically reflect this, encouraging prompt repayment.
The Cost of a Payday Loan
Typical payday loans are given for amounts of less than $500, but due to the drastic difference in regulations in different provinces, anyone considering a payday loan should plan ahead. Payday loans are meant for short-term use.
As with any loan, take the time to read the fine print on your loan terms so you are aware of what’s expected in regard to repayment, the interest amounts you’ll be expected to pay, and any other fees that may be associated with your loan.
Your Rights with a Payday Loan
The most important thing to remember when considering any type of loan is to know your rights as a borrower. Figure out what the interest rates are for different lenders, read the fine print on the loan application, and be comfortable with saying “no.” You have the right to know what you are signing for, as well as the right to open communication with the loan agency.
A few other important rights include
- Loan agencies cannot garnish your wages for missed payment without a court settlement
- You cannot be arrested for failure to pay
- A loan agency cannot force you to sign away your rights or force you into arbitration. You may have certain protections under provincial and federal regulations, so remember to do your research and see what applies to you in your state
Payday loans can be useful in times of crisis, and doing your research can ensure that you are well informed and protected before you sign on the dotted line.
