Payday loans are one of the most popular forms of small quick loans in the world today. In fact, they are so popular they are already available in nearly half of all the countries in the world. In the US, there are institutions offering these loans in 35 states. Therefore, it is quite easy to get a speedy loan Milwaukee, for example. In spite of all their popularity, the fact is that there are still things which are not known by the people who borrow the loans.
How Do These Loans Work?
The primary purpose behind the payday loans is to help them take care of the expenses till they get their paycheck. As a result, these loans have a few characteristics which are not offered by the other kind of loans offered by banks or other financial institutions. Here are some of the features.
- The amount lent in these loans tends to be low. The average loan is worth around $350.
- The amount given out is dependent on the income of the borrower. Borrowers cannot take out more money than what they earn.
- The borrower, typically, has only a couple of weeks to pay the amount back. The time period is generally till the next payday. However, some lenders may allow the borrower to determine the repayment period.
- The interest is charged on the basis of the time period. As a result, the rates are considerably higher than the other type of loans available.
- The money borrowed is paid directly to the bank account of the borrower. In some cases, the lending institution may opt to give the money in cash.
The money you get from a speedy loan Milwaukee is meant to be used for immediate and sudden expenses. They are by no means a long-term financial solution and you should not consider them as such. On the due date, you will have to pay back the full amount owed along with the interest from the bank account. If you are unable to make the payment, the lender may offer an extension. However, some lenders may increase the interest rate on the loan in such cases.
The Cost of Going for Payday Loans
If you are not careful, you will find that payday cash advances are worsening your situation instead of solving it. This usually occurs if you are unable to afford the repayment on the due date.
The fact is that the interest charged for payday loans tend to be rather high on average. In fact, the average APR of a payday loan can be over 100%. On the other hand, the typical APR for a credit card is around 18%. Moreover, the lender has the right to charge an extra fee, known as default charges, if you fail to pay back the loan in time. As a result, you will have to pay the amount owed, the interest and the fee.
In short, your debt can spiral out of control if you are not careful when taking out the loan.
Avoiding Debts Caused By Payday Loans
Due to the ease with which you can enter a cycle of debt, you need to take the proper precautions to ensure that this does not happen when you go for payday cash advances. Here are some of the strategies which can help you make sure that this is does not happen.
- Avoid agreeing to the recurring payment facilities provided by the lenders. If you agree, the lender gains the ability to take the payments directly from your bank or debit card. This can push you into further debt.
- Rollovers are something that you should also avoid. In many cases, the lenders may offer this solution if you cannot meet the payments owed. Rollovers will only increase the owed money in the long run.
- Precautions being better than cures, it is essential that you look for alternative sources of loans before going for payday cash advances.
- Do not be fooled by the advertisements by payday lenders as they claim a lot of things but hide the more important ones in the fine print.
- Before getting payday cash advances, determine how you can pay the amount back. If you think you cannot do so, you must avoid getting the loan.