8 Essential Facts You Need to Know About Payday Loans

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We all know how challenging it can be to navigate through financial shortage between paydays. You are uncertain of what to do, and consequently, you resort to check out with payday loans – Akron Ohio is a very reliable payday loans provider.

Many people regret why their decision to take the payday loan since the repayment amount is usually higher by far than the borrowed amount. It can put you in a more difficult situation.

Some people have shared their stressful experience with payday loans, and as a result, we have compiled facts about how they operate, their trouble and what needs to be done to avoid trouble with repaying payday loans. You will definitely find no company disclosing these facts to you, so read on.

Interest

Interest rates are very high with payday loans. Basically, payday loan lenders are required to publish Annual Percentage Rates (APR). These are the rates that apply if you were to take a loan for whole 12 months. Due to their suspicious behavior, they introduce cheap sounding interest like 1% per day, to entice the borrowers. “This must be cheap and affordable, “you thought to yourself. But what you don’t know is that by the end of 2 months, you already owe double the borrowed amount, not mentioning the penalties for late repayment.

Access To Your Bank Account

While applying for a payday loan, you will realize that most lenders demand that you set up a recurring payment, better known as Continuous Payment Authority (CPA). This system allows lenders to take money directly from your bank account on the due date, without consulting you.

You may think that this sounds pretty simple, as you won’t have to worry about forgetting the due dates. It’s easy and super-fast to set up, yes, probably with your headset, but it’s not easy to cancel, and this denies you an opportunity to manage your hard-earned finances.

Right To Cancel Continuous Payment Authority

The new regulation requires the banks to cancel any CPA on your account on requesting them to do so. While it’s still a complicated process, you should get a refund in case the bank proceeded with the payment.

They Are Short Term

Payday loans are only short-term and are meant to last from one payday to another. The lender might still entice you with rollover or deferral services which makes the payment more expensive.

However, roll over, and deferral are limited in time they can be offered. While rolling over a loan seems like a great relieve in the persistent financial crisis, it can lead to too much interest and fees piling up with time. This could make you struggle with meeting daily financial demands.

14-Day Cooling Off Period

You are in a dire financial situation and badly need a financial boost. You take a payday loan to cushion you before you get your next paycheck, and before 14 days are over, you realize you can cancel the payday loan. Most lenders give a reprieve for borrowers to be able to cancel the agreement within the 14 days. This means you only pay the interest until then, and any other additional charges are refunded to you.

Payday Loan Lenders Are Just Business People

Most Payday loan lenders are in business, just like other business out there. Profit making is their core business, and they will not be mindful of the financial situation of the borrower. They may not even consider your past credit review, as they are out to make a profit from your unfortunate events.

Is payday loan left the only option? Alright, you may consider researching for more professional ones; the ones that will be mindful of your financial welfare.  They will look into your financial status and cap the amount of loan they will offer to you. Otherwise, ordinary payday lenders are out to make a profit, regrettably from your bad fortune.

Credibility

While a payday loan serves as a savior, it may cause long-term damage to your financial credibility. During the unexpected turn of events where you are unable to repay, banks and other lenders may deny you privileges such as mortgages.

Most lenders also look at payday loans as a proof that you’re struggling to make ends meet, and therefore you can be trusted with bigger financial facilities. Payday loans may paint you a spendthrift, or an irresponsible spender who cannot be trusted financially. As much as they offer quick financial fixes, payday loans may cause a serious long-term damage to your financial credibility.

Unending Cycle

You will agree to the fact that you take a payday loan in the belief that it will fix your situation for good. More often than not, this is not the case, as they only offer short-term solutions up to the payday. Immediately after the payday, the need strikes again, and you get yourself into another and another payday loan. That which was meant to be one-time payday loan turns into a continuous cycle of short-term loans.

The above facts will help you “look before you leap” into payday loans. It’s important to analyze the above facts and decide whether to go for payday loans or consider other borrowing alternatives.

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