Monthly Archive for: "August, 2012"
The FTC recently weighed in on Payday Loans and I couldn’t agree more with their take on things. Payday loans are NOT loans that should be taken out for frivolous expenses like eating out or getting a new TV just because the sale ends before your paycheck arrives! Use common sense here people and ONLY get a payday loan in case you REALLY have no other choice.
To understand why you shouldn’t get a payday loan for these types of discretionary expenses (wants versus needs), you first need to understand what a payday loan is and how a payday loan works.
What is a Payday Loan?
A small (usually under $1000), short-term (should be paid back at next paycheck: 2-4 weeks), high-rate loans (ranging from 7% if you have the most amazing credit score ever and don’t mind waiting a week or two to receive the money) to 450% if you have terrible credit and need the money in an hour) by check cashers, finance companies and private lenders.
How Do Payday Loans Work?
When you get a payday loan online, you agree to let the lender withdraw the loan amount on your next payday. The payday lender will usually deposit the loan you requested (minus their fees) within 1 to 24 hours. The fees on pay day loans can be a percentage of the amount you borrowed or they can be based on increments of money borrowed (i.e. you pay a set fee for every $100 you borrow). If you ever need to extend (aka “roll over”) your loan past the usual 2-4 weeks (one payday period), you will be charged new fees each and every time. These fees can really add up, so do your best to pay it off in the one pay period you originally agreed to.
Real Life Example of How A Payday Loan Works
Lets say you need to borrow $200 to pay for an unexpected car expense. You signup online with a reputable pay day lender for a $300 loan. The fee per $100 borrowed is $15. So, instead of getting $300 deposited into your bank account in 1 hour, you only get $255 ($300 loan – $45 in loan fees = $255 deposited into your bank account0. When the loan comes due in 2 weeks, the payday lender will auto-withdraw the amount you borrowed ($300) from your bank account. If you need to extended the loan because you don’t have the $300 needed in your account, the lender will do it, but you’ll need to pay another $45 loan fee! That’s how the APR (Annual Percentage Rate) can climb all the way up to 450%+
The Federal Truth In Lending Act Is Here To Help
Just like when you’re getting a car loan or a mortgage, every payday lender MUST disclose the cost of the loan to you. They must give you the finance charge (a $ amount) and the APR (the cost of the loan on a yearly basis) in writing before you agree to the loan. The APR is based on several different things, including the amount of money you borrow, the interest rate on the loan and credit costs you will be charged, and the expected length of your loan.
Here’s one such disclosure chart from the popular payday loan / personal loan provider Great Plains Lending:
Cheaper Ways To Get a Short Term Loan
If you don’t need the money in one hour or even a couple of day and you’ve got good a good credit score, then you should really consider getting a loan from a personal loan provider instead of a payday loan provider. Personal loans take longer to receive (up to a week or two) but are much, much cheaper than payday loans.
If you’re not under a serious time crunch and you’ve got excellent credit, then you should really get a short-term loan from someone on Prosper.com where rates start as low as 6.59%. Learn more at www.prosper.com
When you’re getting a payday loan, you shouldn’t trust just any website with your personal data (driver’s license #, bank account info, social security number, employment info, etc.), because this is all the info an identity thief needs to pull out a new credit card in your name or rent an apartment in your name!
Now, I’m not saying that one of the more reputable payday loan lenders would sink to this level. Not at all. After all, they’re in the business of loaning money to people that need it quickly. They make enough money doing this that they don’t need to steal anyone’s identity.
No, I’m referring to one of those sites you see advertising on your favorite search engine that you’ve never heard of before but seems to have the lowest APR you can find for a payday loan lender. If it’s too good to be true, then it most definitely is.
So, when you do find yourself in need of a payday loan, be sure to go with one like 100 Day Loans that has at least the same level of security in place to ensure your data is never misused or stolen by a random website hacker in Russia.
Here’s what 100 Day Loans has in place to ensure your safety that most other payday loan lenders do not:
- They visually tell you that your info is safe with them:
- And they tell you how it’s safe with them (265-bit SSL Encryption):
- If they’re really good, they might even do it three times!
- And there is an easy way to check to make sure what they say on their website is true. If you are on a Mac, you can click on the green part of the URL address bar…
And it should pull up the actual SSL Certificate from VeriSign:
Not only will the SSL certificate show you who owns the website (Acquisition Media, LLC), but also where they are based: Scottsdale, AZ.
So remember, if you don’t feel like your personal information is going to be safe with the payday lender you are going to get a loan from, then just don’t do it! ALWAYS go with a payday loan company you can trust! If you’re ever in doubt, be sure to check our payday loan reviews to ensure your payday loan provider is everything you hope it is.
As you start your loan application they have this stopwatch that starts counting down from 10 minutes. Here’s what it looks like…
As you get going with the application (which should only take you 7 minutes), you can check back up and see how much time you have left…
You get the feeling like you really need to hurry things along or else you’re going to lose the opportunity to get $1000 delivered to your bank account in the next hour. Well, let me put your fears at ease…that stopwatch is just to encourage you to complete your loan application sooner rather than later. How do I know? Because I accidentally ran out of time myself…
I clicked “OK” for more time and was magically given an extra 10 minutes to complete my application. YEAH!!! But this got me thinking…what happens if I click “CANCEL” the next time I run out of time? So, I let the clock run down again, clicked the cancel button and was instantly given a new message with no countdown…
So, the lesson here is to not worry about those unnecessary stopwatches you may find on payday loan sites like 1 Hour Direct. They may be there to help you along with your application, but as far as I’m concerned, they are totally unnecessary.
We just added our 100 Day Loans Review and I must say that I was pretty impressed with their service. They are not a payday loan provider themselves, but they do match you up with 1 of 122 lenders in their payday loan network. Because they aren’t the payday loan provider themselves, they can’t guarantee every lender will offer you a 100 day repayment period, but when I got my payday loan through them, I was given 100 days to repay the loan versus the usual 14 to 30 days. A very nice bonus as far as I’m concerned. After all, having to repay the loan in 14 days is sometimes a tough deal.
So, here are the pros and cons I found when getting a payday loan from 100 Day Loans:
100 Day Loans Pros:
- Get up to $1000 in cash within hours
- Even people with bad credit can get a loan
- You may get up to 100 days to repay your loan
- There is usually no faxing of documents required!
- Your information is ALWAYS safe thanks to them using Verisign SSL Encryption
100 Day Loans Cons:
- 24 hour customer support is only by phone and email, which means you can’t physically go visit them to get your payday loan
- Not all the payday loan lenders featured in their network offer the 100 day loan repayment option
Learn More @ http://www.100dayloans.com
You can read our entire 100 Day Loans Review at http://www.payday-loan.org/reviews/100-day-loans-review/