For all those unable to manage their monthly expenses, payday loans are the easiest option available to escape the financial crisis. While most of the borrowers use the payday loans in order to manage the recurring expenses there are certain users using the payday loans judiciously in case of emergency. Payday loans repayment is a lump sum by automatic withdrawal from the account as soon as the salary arrives. Payday loans usually trouble many borrowers as they select the wrong option and trap in the vicious circle. Choose from the options carefully to avoid debts.
Basis Of Comparison
Payday loans are unsecured personal loans with a short repayment period of 2-3 weeks. Payday loans are not suitable for everyone; sometimes some lenders trap the students by presenting the payday loans as simple student loans. It is important to compare all the payday loans options based on certain parameters to avoid financial loss. These parameters involve a credit check of the company and scrutinizing the terms of the payday loans offered by them.
Payday loans are usually offered by small and unorganized finance companies with limited or single door service. Before you end up borrowing payday loans from the wrong lender, it is very important to check their credibility. Ask the company representative to show you the license and the other certificates provided by the authorities of your state in order to lend there. The benefit of choosing the lender with a license to operate is you can move to the consumer rights forum in case you are unable to repay the loan due to an emergency.
Once you submit the proof of your situation with the administration, the local body will regulate the company to offer the borrower with an extended payment period without charging any extra fees from you. Once you default the repayment period, the lender will increase the rate of interest on a daily basis and you may land into bigger trouble. If the lender owns a license and verified by the local-administration the lender will not be able to increase the rate of interest beyond a limit and the borrowed money will not increase beyond the threshold value.
Company’s Past Record
It is very important to compare the lenders offering payday loans based on customer reviews and the company’s reputation in the market. Check for the number of satisfied customers that the company claims. Search the internet or the local advisers in order to know about the record of accomplishment of the company. Check the local police station about any complaints against the company for recovering the payday loans using unfair means. Even if the company offers, you double the amount at an extended period of repayment of the payday loans; decline the offer if the company’s reputation is poor.
Terms Of Agreement
Some financial companies are very clever. They recognize the borrowers who are inconsistent need of the payday loans as they fail to manage their monthly expenses. These borrowers are vulnerable to false schemes like a rollover. While the lender drafts the agreement of the payday loans, they offer the borrower with rollover scheme and get it signed from them. Under the scheme the payday loans borrowed by the consumer will be renewed automatically, this may lure the borrower, and he may lend himself in the vicious circle of payday loans.
The financial companies earn huge profit from the borrowers of the payday loans. They draft special schemes and offers to turn the borrowers as a permanent client and extract maximum benefit from them. Read the terms of the agreement very carefully. Take along a trustworthy friend or relative to double check the terms of the agreement and decline any offers of rollover or double loan amount straight away. Use payday loans for emergency only and do not make it a habit to manage financial needs.
Breach Of Information
The business of lending money in the form of unsecured personal loans like payday loans earns huge profit to the companies. Many companies provide payday loans through online portals and applications. The user is required to submit the documents stating all the personal details and employment status. The companies breach the bank details submitted by the users and they sell this information to the third party lenders. The borrower receives consistent calls and emails regarding the payday loans offer.
In some cases, the borrower reported fraud cases where the personal information was breached by the lenders and it leads to a credit card or debit card fraud. Whenever you borrow payday loans, it is very important to read the agreement very carefully before signing it. Some companies include a term in the agreement to use the personal information provided by the borrower for promotional purpose. Ask the lender to hand over all the personal documents once the loan is repaid and avoid any chance of information breach.
The Bottom Line
Payday loans provide money in the fastest and the easiest way. Most of the borrowers get trapped in the vicious circle of the payday loans and become debt ridden. One of the main reasons behind the financial loss is that the people don’t compare the options available to them in the first place. It is important to check the credibility and reputation of the company before borrowing payday loans from them. Read the terms stated in the agreement to avoid any chance of a breach of information and any rollover scheme that might trap you into the vicious circle.
It is also important to note that one should avail the payday loans only in cases of emergency and if all the other options have been exhausted. This is because payday loans come with a very high interest rate of more than 1700%. This can keep you in debt for a long time if you are not able to pay the loan in due time. Therefore, it is advisable that you should always remain cautious and not fall in the vicious cycle of debt.