A payday loan refers to a short-term loan that you can access for small amounts of cash. Payday loans could be a good option if you need fast cash. You can find these loans from internet sites and high street shops. It can be quite easy to get a payday loan but they have high interest rates depending on the lender.
If you want to get a payday loan, you need to shop around and check for a lender with good interest and charges before you decide to borrow. Also, you need to know what may happen if you repay this loan. This page discusses what you need to do before taking a payday loan.
Before taking a payday loan
It’s important for you to shop around for payday lenders with the best deal. Online payday lenders need to show their deals so that you can compare their offerings with others. You can also use price comparison websites to compare deals offered by payday lenders.
However, a financial regulatory authority needs to regulate these sites. Ideally, you can use the lender’s company name instead of a website’s name, which you can find on their homepage.
When you apply for a payday loan, before you access the cash, most lenders usually check whether or not you can pay it back. Therefore, a lender can check that you have enough money coming in every month for you to repay the loan.
A good payday lender also needs to explain the key features of the payday loan, such as the amount of money you will need to pay back, what can happen if you fail to repay the loan, and that this loan is not ideal for long-term borrowing.
All the marketing concerning a payday loan including adverts that are sent by text message or email must have a warning. This warning should indicate that a late payment can lead to serious financial problems. In most cases, payday loans have an interest cap and you don’t need to pay back an amount of money that is more than twice what you have borrowed.
Paying back payday loans
In most cases, some lenders can give you up to a month to pay back the cash you borrowed and interest. One of the common ways you can repay a payday loan is via your bank debit card. When you receive the loan, it means that you are agreeing to let a payday lender get the cash from your bank account. This is sometimes known as a continuous payment authority.
But if there are inadequate funds in the bank account to pay back the loan on a scheduled date, then the lender can ask your bank for part or all of the money. And, there can be charges added for late payment.
However, your payday lender may not use a continuous payment more than twice, especially if they failed to get the cash from your account. Aside from this, the lender should not attempt to get a part payment.