When you’re coping with a bad credit history and need access to quick cash, a payday loan can provide you with the funds you need to help you through until your next payday. However, there are a few payday loan aspects that you should understand before signing up for your first cash advance.
Understand Payday Loan Purposes
Payday lenders provide fast cash to cover an unexpected financial dilemma such as to pay for an emergency car repair or an urgent medical procedure.
If you’re looking for a little extra cash to help pay for your trip to the Bahamas or you’re yearning for a pair of designer shoes that you can’t quite afford, save up money or borrow from a relative, but do not take out a payday loan to cover these unnecessary purchases! Taking out a payday loan to purchase nonessentials could cause you deeper financial troubles if you are unable to repay the loan.
If you are in fact applying for a payday loan to cover one of life’s emergencies, realize that most payday lenders require that you repay the loan by your next payday to avoid additional charges.
Know the Qualifications
While payday lenders are willing to offer cash advances despite your poor credit score, there are some restrictions that apply.
Firstly, you must be at least 18 years of age to qualify for a loan. Secondly, some lenders require that you prove that you have a source of steady income, while other lenders may request evidence of two months of employment history. Thirdly, depending on the lending company, the lender may insist that you have an open and active checking or savings account. Finally, it’s a good idea to check out the rules and regulations concerning payday lending in your state before you apply.
Read the Fine Print
The Truth and Lending Act requires lenders to fully disclose information concerning the details of the loan agreement. You should read the entire agreement to determine the fees, interest rates, and deadlines associated with payday loans. The loan agreement will most likely also include information on the actions the lender and borrower can take in case a dispute arises between you. Understand all of these terms before signing up for the loan, and ask questions to clarify details.